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V 


THE  POSTAL  DEFICIT 


AN  EXAMINATION  OF  SOME  OF  THE  LEGISLA- 
TIVE   AND    ADMINISTRATIVE    ASPECTS 
OF  A  GREAT  STATE  INDUSTRY 


BY 

H.   T.   NEWCOMB 

Author  of  "  Railway  Economics  ;  "  Expert  Chief  of  Division  in 

the   Office   of    the   Twelfth   Census ;    Secretary  of  the 

Section   on   Economic   and   Social    Science    of   the 

American  Association  for  the  Advancement 

of  Science  ;    Member  of  the  American 

Economic  Association  ;  Fellow  of 

the     Royal    Statistical 

Society,    etc. 


WASHINGTON 

WM.  BALLANTYNE  &  SONS 

1900 


Copyright,  1900, 
By  H.  T.  NEWCOMB 


GENERAL 


PRESS    OF    JUDD    &    DETWEILER 
WASHINGTON,    D.    C. 


PREFATORY  NOTE. 


This  paper  was  prepared  early  in  the  year  1900,  and 
in  its  original  form  was  submitted  to  the  American 
Association  for  the  Advancement  of  Science,  during 
the  annual  meeting  held  at  New  York,  in  June,  1000. 
The  subject  was  of  such  interest  to  the  writer  and  the 
developments  of  the  controversy  concerning  railway 
mail  compensation  became  so  important  that  he  de- 
termined to  undertake  its  revision. 

The  present  paper,  although  considerably  increase*  1 
in  bulk,  and  including  accounts  of  incidents  that  have 
occurred  since  the  original  was  prepared,  is  the  result 

of  that  revision. 

H.  T.  N. 

Census  Office,  December,  1900. 


1 07490 


CONTENTS. 

I.     INTRODUCTION 

A.  Extent  of  the  postal  service a 

/>.  The  postal  principle.  .  a 

IT.  The  Deficit..      

A.  si„,uld  the  postal  service  be  self-supporting?" .  1 1 

B.  Excess  of  expenditures  over  revenue. ........  i  •- 

C.  How  a  deficit  can  be  prevented H 

III.   Railway  Mail  Pay 

A.  Railway  services  in  connection  with  mail  trans- 
portation    9„ 

a.  Postal  and  compartment  car  service. . .  32 

b.  Traveling  post-offices 40 

c.  Messenger  service 49 

d.  Special  station  services 54 

e.  Records  and  reports  required 50 

/.  Free    transportation   of   persons    and 

property 56 

g.  Risk  assumed  by  railways 58 

h.  Railway  services  summarized 60 

B.  Railway  compensation 61 

a.  Weighing 69 

b.  Decline  in  rates  for  railway  mail  service.       75 

C.  The  attack  on  the  present  system 84 

a.  Mr.  Finlev  Acker   .  .    .  oc 

^  O') 

b.  Mr.  James  Lewis  Cowles §9 

D.  The  investigation ,,l 

a.  The  Adams  report ()•> 

b.  Fundamental  principles 110 

c.  The  principle  of  public  utility li>l 

d.  The   principle   that    density  of  traffic 

enables  economies i:;o 

e.  Reductions  recommended  by  Professor 

Adams ];;- 

./'    Further  investigation  recommended  by 

Professor  A, lam- 14.-, 

!/.  General  review  of  Professor  Adams'  re- 

P°rt 147 

A.  Summary H«, 

/■:.  General  conclusions  concerning  railway  mail 

pay 14!, 

IV.  General  Conclusions...  1-- 

i  0-) 


THE  POSTAL  DEFICIT. 


The  people  of  the  United  States  can  justly  take 
great  pride  in  the  postal  system  which  they  have 
established.  The  organization  of  the  Post-office  De- 
partment extends  over  a  vast  continental  territory, 
throughout  which  there  is  practically  no  community 
too  small  and  no  hamlet  too  remote  from  the  great 
centers  of  population,  or  from  the  ordinary  means  of 
transportation,  to  receive  regular  and  reliable  mail 
service.  Within  recent  months  there  has  been  a 
great  extension  of  the  postal  agencies,  and  at  the 
present  time  the  two-cent  stamp  will  carry  a  letter 
from  Manila  or  San  Juan,  in  the  tropics,  to  the  min- 
ing camps  of  Alaska,  in  the  vicinity  of  the  Arctic 
Circle. 

The  extent  of  the  utilization  of  these  postal  facil- 
ities is  probably  without  a  parallel  elsewhere  on  the 
globe,  and  the  figures  necessary  t<»  express  it  are 
scarcely  within  the  limits  of  human  comprehension. 
The  following  data  are  from  the  latest  report  of  the 
Third  Assistant  Postmaster  General  of  the  United 
States : 


8  the  postal  deficit. 

Number  of    Pieces    Mailed    During   the    Year 

Ended  June  30,  1899. 

-r.  '  xr  *  Numbers 

Descr.ption.  Numbers.*     Per  CAP1TA-t 

Letters  and  other  matter  sent  at 

letter  rates 2,917,000,000  39.42 

Letters  and  other  matter  as  official 

business,  free 98,092,000  1.33 

Postal  cards 573,634,000  7.75 

Newspapers  and  periodicals  paid, 

at  pound  rates 1,447,013,000  19.55 

Newspapers  and  periodicals,  free 

within  county  of  origin.    622,417,000  S>41 

Newspapers  and  periodicals,  paid 

at  transient  rates 104,286,000  1.4L 

Books,  pamphlets,  circulars,  and 

miscellaneous  printed  matter. .        747,695,000  10.10 

Merchandise,  seeds,  plants,  etc . .  66,173,000  .89 

6,576,310,000  88.86 

THE    POSTAL    PRINCIPLE. 

The  expansion  of  the  postal  system  in  the  degree 
indicated  by  the  foregoing  has  been  accomplished  by 
the  observance  of  the  principle  which,  regarding  the 
object  of  the  postal  business  as  the  distribution  of 
intelligence,  assumes  that  it  is  of  the  highest  social 
utility  and  importance,  and  that  consequently  it  is 
perfectly  legitimate  to  disregard  the  cost  of  the  par- 

*Annual  Report  of  the  Post-office  Department  for  the  year 
1899,  page  753. 

t  Calculated  from  the  foregoing  on  the  basis  of  74,000,000 
population. 


THE    POSTAL    DEFICIT.  9 

ticular  services  performed  in  fixing  the  specific  rate 
to  be  applied  to  each.  In  the  application  of  this 
principle,  rates  vastly  in  excess  of  the  cost  of  service 
have  been  charged  for  local  services  in  the  more 
densely  populated  regions,  while  mail  has  been  car- 
ried over  great  distances  and  in  sparsely  inhabited 
regions  at  rates  so  insignificant  in  comparison  with 
the  cost  that  the  relations  cannot  be  expressed  in 
numbers  that  convev  definite  meanings. 

In  other  words,  the  people  of  the  United  States 
have  deliberately  placed  a  tax  upon  a  very  large  pro- 
portion of  the  mail  carried  in  order  that  postal  facil- 
ities might  be  extended  and  the  distribution  of  in- 
telligence made  cheap  and  effective  in  localities 
where  remunerative  rates  would  be  prohibitive.  It 
may  fairly  be  assumed  that  this  practice  has  sub- 
stantially the  unanimous  approval  of  the  people,  for 
though  it  is  as  thorough! v  understood  as  any  of  the 
methods  of  the  Government,  there  is  scared  v  a  scin- 
tilla  of  evidence  that  it  is  condemned  by  any  one. 
The  citizens  of  the  citv  of  New  York,  whose  mail 
traffic  is  immensely  profitable,  have  never  protested 
because  the  revenues  to  which  they  contribute  so 
generously  are  diverted  to  the  support  of  the  ex- 
tremely costly  services  that  are  rendered  in  Alaska 
and  in  the  panhandle  of  Texas.  The  average  cost 
of  sending  each  of  the  letters  composing  the  first  lol 
of  mail  sent  to  Circle  City,  Alaska,  is  reported  as 
$450,in  return  for  which  the  Post-office  Department 
received  only  the  price  of  a  two-cent  stamp,  the  same 
amount   that    carries  a  letter  from  the  Battery  to 

2 


10  THE   POSTAL    DEFICIT. 

Harlem,  in  New  York  city.  On  the  other  hand, 
while  the  average  amount  collected  on  each  pound 
of  letter  mail  is  over  eighty  cents,  the  excess  over 
the  rate  of  two  cents  per  ounce,  or  thirty-two  cents 
per  pound,  being  attributable  to  the  fact  that  letters 
rarely  reach  the  prescribed  limit  of  weight,  there  are 
dense  railway  routes  on  which  the  payment  for  mail 
transportation  averages  less  than  thirty-two  cents  per 
hundred  pounds,  or  about  seven  one-thousandths  of 
one  cent  per  letter.  Of  course  this  is  not  all  of  the 
expense,  but  under  such  conditions  the  profit  on  each 
letter  cannot  be  less  than  1,000  per  cent.  It  is  this 
profit  which  the  people  willingly  divert  to  the  pay- 
ment of  the  expenses  of  mail  service  in  sparsely  set- 
tled regions  and  those  incurred  for  bulkier  and  less 
remunerative  kinds  of  mail  traffic. 

The  explanation  of  this  general  acquiescence  in  a 
system  by  which  the  business  of  many  is  taxed  to 
provide  facilities  where  they  are  without  commercial 
justification  is  not  found  in  any  impulse  of  altruism, 
but  rather  in  the  fact  that  the  amount  paid  for  postal 
services  constitutes  a  negligible  proportion  of  the 
aggregate  expenses  of  most  industrial  enterprises. 
Whenever  this  is  not  the  case  and  the  exceptions  are 
absolutely  confined  to  industries  which  make  large 
use  of  the  mail  for  forwarding  second  and  fourth 
class  matter,  there  is  probably  a  very  lively  appreci- 
ation of  the  fact  that  the  rates  paid  are  far  below  the 
cost  of  the  service.  Those  who  are  thus  consciously 
receiving  what  amounts  to  a  public  subsidy  in  aid 
of  their  business  doubtless  feel  that  complete  silence 


THE   POSTAL    DEFICIT.  11 

in  regard  to  the  principle  which  has  been,  perhaps 
erroneously,  extended  s<>  as  to  permit  the  distribu- 
tion of  the  cost  of  tin-  mail  service  among  all  class  - 
of  matter  carried,  as  well  as  anions  all  regions  served, 
without  regard  t<>  specific  costs,  best  serves  their  own 
interests. 

SHOULD    THE    POSTAL    SERVICE     BE    SELF-SUPPORTING? 

If  the  mail  service  of  the  United  States  is  to  he 
conducted  in  accordance  with  the  principle  just  out- 
lined, it  is  a  little  difficult  to  understand  the  grounds 
upon  which  it  can  be  urged  that  the  revenues  de- 
rived from  it  should  be  invariably  equal  to  the  ex- 
penditures which  it  requires.  If  it  is  proper,  as  is 
admitted  without  perceptible  objection,  to  tax  heavily 
the  mail  of  90  per  cent  of  the  population  in  order 
that  the  facilities  supplied  to  the  remainder  shall  be 
greatly  in  excess  of  their  ability  or  willingness  to 
pay,  there  would  appear  to  be  little  harm  in  impos- 
ing a  small  general  tax  in  order  to  oflfsei  ;i  slight 
difference  between  receipts  and  expenditures.  It  is 
clear  that  in  a  business  of  such  magnitude  and 
changing  volume  it  would  be  impossible  to  maintain 
;iu  absolute  balance.  The  choice,  therefore,  is  be- 
tween a  surplus  and  a  deficit,  and  rather  than  add 
to  the  taxation  already  laid  upon  those  who  contrib- 
ute mosl  n>  postal  revenues,  there  -<«'!ii  to  be  many 
reasons  for  preferring  the  latter.  Yel  it  would  be 
unwise  noi  to  recognize  the  existence  of  a  sentiment 
which  demands  that  the  mail  service  be  made  fullv 


12 


THE   POSTAL   DEFICIT. 


self-supporting.  In  deference  to  this  sentiment,  it  is 
well  that  .the  friends  of  the  postal  establishment 
should  examine  its  operations  and  seek  to  determine 
whether  any  modification  of  the  methods  now  in 
vogue  which  can  be  adopted  without  public  detri- 
ment will  insure  a  more  generally  satisfactory  rela- 
tion between  its  income  and  its  expenditures. 

THE  EXCESS  OF  EXPENDITURES  OYER  REVENUE. 

The  most  concise  and  satisfactory  recent  statement 
of  the  financial  operations  of  the  Post-office  Depart- 
ment, with  a  view  of  developing  the  extent  of  the 
annual  deficit,  was  presented  to  the  National  House 
of  Representatives  on  March  22, 1900,  by  Honorable 
W.  W.  Moody,  of  Massachusetts.  * 

The  following  data  are  from  the  statement  re- 
ferred to : 


Year  ended 
June  30. 

Eeceipts. 

Expenditures. 

Deficit. 

1890 

$60,882,097.92 
65,931,785.72 
70,930,475.98 
75,896,933.16 
75,080,479.04 
76,983,128.19 
82,499,208.40 
82,665,462.73 
89,012,618.55 
95,021,384.17 

$66,259,547.84 
73,059,519.49 
76,980,846.16 
81,581,681.33 
84,994,111.62 
87,179,551.28 
90,932,669.50 
94,077,242.38 
98,033,523.61 

101,632,160.92 

$5,377,449.92 

1891 

7,127,733.77 

1892 

6,050,370.18 
5,684,748.17 

1893 

1894 

1895 

1896 

9,913,632.58 

10,196,423.09 

8,433,461.10 

1897 

11,411,779.65 

1898 

1899 

9,020,905.06 
6,610,776.75 

*  Congressional  Record,    Fifty-sixth   Congress,   first  session, 
March  27,  1900,  pp.  3612-3613. 


THE    TOSTAL    DEFICIT. 


13 


The  foregoing  shows  the  deficit  carried  upon  the 
books  of  the   Department,  but  this   is  considerably 

lower  than  the  actual  deficit,  on  account  of  facts  thai 
were  fully  explained  by  Mr.  Moody. 

Certain  obligations  incurred  1>y  the  Post-nflice 
Department  to  the  Pacific  railroads  were  not  charged 
against  the  postal  revenues,  because  they  were  cred- 
ited by  the  Treasury  Department  on  the  debts  of 
those  railways  to  the  Government.  Similarly,  the 
salaries  of  the  employes  of  the  executive  department 
charged  with  the  duty  of  auditing  the  accounts  of 
the  postal  service:  and  the  salaries,  contingent  ex- 
penses, printing,  and  binding  of  the  Post-office  De- 
partment are  not.  according  to  the  book-keeping 
methods  in  vogue,  included  in  the  foregoing. 

The  following  statement  represents  more  accu- 
rately, therefore,  the  true  deficit  of  the  years  in- 
eluded  : 


Year  ended  June  3d. 


L890... 
L891... 

■ 

- 
l-:'7... 

L899... 


Book-keep- 
ing deficit 
as  given. 


-: 


-  77,449.92 
7, 1U7. 7:::;.  77 
6,050,370.18 
5,684,748.17 
9,913,632.58 

10,196,423.09 
8,433,461.10 

11. til. 77 
9,020,905.06 
)".77«'..7.", 


Amounts 

earned  by 
Pacific  rail- 
way-. 


-1 

1 
1 
1 
1 

1 
1 
1 


,207, 

.:::;•;. 

,627 
,628, 
,648, 
,558, 

..".7:;. 
•  '.in. 


101.80 
430.91 
154.09 
»•_'•_'.  1 1 
0.09 
997.90 
898.69 
889.08 
700.42 
941.97 


Salaries,  etc. 


$1,631,030.72 
[,644,724.00 
1,680,670.00 
1,690,580.00 
1,693,911.00 
1,693,151.00 
1,644,090.00 
1,645,070.00 
1,648,840.00 
1,662,539.00 


Total. 


$8,215,882.  II 

L0,108,8£ 
9,539,194.27 
9,002,750.28 

13,236,313.67 

13,538,571.99 

11,636,449.79 

L4,63i»,7 

11,274,445.48 
B,870,257.72 


Strictly  speaking,  even   the   foregoing   totals  are 
lower   than  the  facts,  for   they    include  no   interesl 


14  THE    POSTAL    DEFICIT. 

upon  the  value  of  the  buildings  owned  by  the  Gov- 
ernment and  devoted,  rent  free,  to  the  postal  service. 
There  can  be  little  harm,  however,  in  adopting  Mr. 
Moody's  suggestion  and  regarding  the  rental  of  these 
buildings  as  payment  for  the  mail  matter  carried 
without  payment  of  postage,  under  the  official  pen- 
alty envelopes. 

HOW    A    DEFICIT    CAN    BE    PREVENTED. 

There  are,  at  least,  three  directions  in  which  the 
solution  of  the  problem  thus  outlined  may  be  sought. 
It  is  conceivable  that  means  might  be  found  for  : 

(a)  Increasing  the  postal  revenues  without  increasing 

its  business  or  expenditures. 

(b)  Decreasing  the  expenditures  without  decreasing 

the  business  or  the  receipts. 

(c)  Either  increasing  or  decreasing  the  business  so 

as  to  secure  correlative  modifications  in  both 
receipts  and  expenditures  that  would  result  in 
an  approximate  balance  between  them. 

It  is  evident,  also,  that  the  adjustment  might  be 
attempted  by  any  possible  combination  of  these  dis- 
tinct means. 

The  practicability  of  the  means  first  suggested  does 
not  appear  to  have  received  much,  if  any,  attention 
from  the  officers  of  the  Post-office  Department  or  the 
members  of  the  postal  committees  of  the  Federal 
Senate  and  House  of  Representatives.     It  will  be 


THE    POSTAL    DEFICIT.  15 

passed  for  the  present  with  the  mere  observation  thai 

it  is  by  no  means  evident  that  there  would  be  any 
material  diminution  in  that  portion  of  the  enormous 
second-class  mail  traffic  which  is  from  every  point 
of  view  least  beneficial  and  desirable  even  though 
the  charges  were  very  considerably  advanced.  The 
evident  satisfaction  with  which  the  publishers  of  the 
periodicals  which  make  up  this  portion  of  the  mail 
receive  accessions  to  their  "  subscription  "  lists,  which 
bring  no  revenue  whatever,  and  the  extent  in  which 
they  make  use  of  sample  copies  that  are  clearly  not 
expected  to  increase  their  permanent  mailing  lists. 
suggest  that  they  could  afford  to  pay  somewhat  more 
for  the  postal  facilities  which  they  use  so  extensively. 
It  is  also  possible  that  greater  revenue  could  he  se- 
cured, without  reducing  the  volume  of  fourth-class 
matter,  by  a  nearer  adjustment  of  the  charges  on 
merchandise    carried  bv  mail  to  the   value   of  the 

In 

services  rendered. 

RAILWAY    MAIL    PAY. 

Most  of  the  propositions  that  have  received  at  all 
_  oeral  consideration  have  been  directed  toward  the 
reduction  of  expenditures.  The  proposals  which  in- 
volve the  greatest  aggregate  curtailment  of  expendi- 
tures relate  to  the  payments  to  railway  companies  for 
the  transportation  of  mail. 

These  proposals  have  the  merit  of  simplicity,  and 
derive  some  plausibility  from  the  fact  that  the  ex- 
penditures  for  railway  transportation  constitute  the 


16  THE    TOSTAL    DEFICIT. 

largest  single  item  in  the  annual  budget  of  the  Post- 
office  Department.  The  relation  of  these  expendi- 
tures to  the  total  for  the  year  ended  June  30,  1899, 
was  as  follows  :  * 

Total  expenditures '. .  $101,632,160.92 

Payments  to  railways 35,759,343.92 

Percentage  of  total  paid  to  railways 35.19 

The  following  statement  shows,  according  to  the 
best  data  available,  the  amount  of  annual  mail  trans- 
portation performed  by  the  railways  during  each 
year  from  1873  to  1898,  inclusive,  the  total  rate  of 
payment  for  each  year,  and  the  average  rates  per  ton 
per  mile .  t 

The  following  data  are  from  the  report  rendered 
to  the  Joint  Postal  Commission  by  Professor  Henry 
C.  Adams,  and,  for  reasons  connected  with  the 
methods  of  determining  weights  of  mail  to  be  used 
as  the  basis  of  railway  pay,  which  will  be  fully  ex- 
plained hereafter,  invariably  understate  the  actual 
movement  of  mail  via  the  railways  and  correspond- 
ingly exaggerate  the  rate  of  payment  per  ton  per 
mile.  With  this  qualification,  they  may  be  assumed, 
for  the  present,  to  be  correct,  it  being  understood, 
however,  that  the  error  makes  the  showing  less  favor- 
able to  the  railways  than  would  otherwise  be  the 
case. 

*Annual  Report  of  the  Postmaster  General  for  year  ended 
June  30,  1899,  pp.  26,  27. 

t  Testimony  taken  by  the  Commission  to  Investigate  the 
Postal  Service,  Part  11,  p.  253. 


THE    POSTAL    DEFICIT. 


17 


Year  ended  June  30. 


1873. 
1874. 


1875.. 

1 876. . 

1877.. 

1878.. 

1879. 

1  -so. . 

1881.. 

1 882. . 

L883.. 

1884.. 

1 8S5. . 

1 886. 

1887.. 

1 888. . 

1889. . 

1890.. 

1891.. 

1892.. 

1 893. . 

1804.. 

1895. 

1896.. 

1897.. 

1898.. 


Total  mail 

transportation 

reduced 

to  ton -miles. 


24,687,923 

31,011,045 

34,163,600 

36,229,459 

37,640,986 

39,755,061 

44,428,619 

-17,11  1,138 

55,746,705 

63,211,781 

72,444,857 

80,277,597 

89,526,808 

06,365,303 

104,038,196 

112.8:511,405 

128,186,659 

142,024,571 

L6l,989,694 

179,062,188 

203,105,521 

226,021,821 

240,638  449 

246,062,726 

266,305,885 

272.714,017 


Annual  rate 

of  pay- 
ment to  rail- 
way-. 


16,522,725 
7,57o,o27 

8,15.3,554 

S,6S6.35S 

9,018,S44 

9,210,268 

9,562,137 

0,703.141 

10,574,072 

11,203,573 

12,915,639 

14,185,720 

15,383,140 

15,888,200 

17,236,650 

18,356,233 

20,060,or,!i 

21,258,428 

2:;. o54. 25:; 

25,881, 003 
28,393,738 

30,114.725 

31,545,392 

31. 001.121 
33,730,037 
34,273,431 


Aver;: 
rate 
per  ton 
per  mile. 


cte. 

26  120 
23.732 
23.866 
23.975 

23.060 
23.107 
21.522 
20.596 
18  969 
17.866 
17.828 
17.670 
17.182 
16  487 
16.51.7 
16.20s 


15 
14 
14 
14 


656 
968 
787 
45:; 
13.073 
13.323 
13.109 

12.001 
12.665 

12.507 


From  the  foregoing  statemenl  it  appears  that, 
measured  in  the  manner  indicated,  the  amounl  of 
mail  transportation  annually  furnished  by  the  rail- 
ways increased,  from  L873  to  L898,  L004.65  per  cent, 
while  the  revenue  received  therefrom  by  tin*  railways 
increased  only  125.45  per  cent.  In  other  words, 
railway  mail  transportation  increased  elevenfold  and 


18 


THE    POSTAL    DEFICIT. 


railway  mail  pay  but  fivefold.  The  average  rate  per 
ton  per  mile,  according  to  these  data,  declined  52.43 
per  cent.  From  1890  to  1898  the  total  transporta- 
tion increased  92.02  per  cent,  railway  pay  01.22  per 
cent,,  and  the  average  rate  decreased  16.04  per  cent. 
These  data  indicate  that  the  railways  at  the  end  of 
the  period  named  performed  for  an  average  payment 
of  47.57  cents  services  for  which  the  average  pay- 
ment in  1873  was  one  dollar,  and  that  the  latter  sum 
was  paid  in  4890,  where  the  expenditure  in  1898  was 
but  83.96  cents.  It  will  be  interesting  to  compare 
with  these  reductions  those  in  payments  for  other 
railway  services.  The  following  presents  such  a 
comparison : 


Average  rate  per  mile 
carried. 

A  verage  rate  of 

1898  com- 
pared with — 

1873. 

1890. 

1898. 

1873. 

1890. 

Passengers  per  pas- 
senger   

Freight  per  ton 

Mail  per  ton 

cts. 

2.851 

1.850 

26420 

cts. 

2.167* 
.941 
14.968 

cts. 

1.973 

.753 

12.567 

% 

69.20 
40.70 
47.57 

% 

91.05 
80.02 
83.96 

If  the  units  adopted  in  the  foregoing  accurately 
measure  the  services  to  which  they  are  respectively 
applied,  it  appears  that  the  average  charge  for  car- 
rying mail  has  declined  much  more  rapidly  than 
that  for  carrying  passengers  and  a  little  less  rapidly 


THE    POSTAL    DEFICIT.  19 

than  that  for  carrying  freight.  In  this  connection, 
the  fact  that  mail  is  always  carried  at  the  speed 
adopted  for  passenger  service,  and  a  large  proportion 

upon  trains  especially  provided  for  mail  service, 
which  take  little  or  no  other  traffic,  should  not  be 
forgotten. 

The  best  that  can  be  said  for  the  ton-mileage  unit 
as  applied  to  mail  service  is  that  under  current  con- 
ditions of  postal  development  it  establishes  the  mini- 
mum limits  of  the  increase  in  the  aggregate  of  the 
services  performed.  These  services  are  not  suscepti- 
ble of  accurate  measurement  bv  such  a  unit,  and 
the  results  of  such  measurements  cannot  be  com- 
pared with  statements  of  freight  movement  expressed 
in  ton-miles  with  sufficient  precision  to  warrant  very 
definite  conclusions.  It  would  be  impossible  to  ex- 
press too  strongly  the  fact,  which  has  apparently 
been  overlooked  by  some  of  those  who  have  discussed 
railway  mail  pay,  that  the  ton-mileage  unit  is  a  verv 
different  thing  when  applied  to  mail  transportation 
than  the  unit  known  by  the  same  name  that  is  ap- 
plied to  freight  traffic.  The  nominal  similarity  is 
nothing  more  than  a  source  of  confusion,  for  the  re- 
quirements of  the  different  services  are  so  diverse 
that  only  the  most  general  comparisons  can  be  at- 
tempted with  safety.  The  ton-mile  of  mail  inmlies, 
usually,  among  other  things,  a  passenger  mile  trav- 
eled by  a  postal  clerk,  and  from  one-third  to  an  entire 
car-mile  tracer— d  by  a  postal  car.  These  are  its  nearly 
invariable  adjuncts,  ami.  with  others  they  are  multi- 
plied in  almost  exact  proportion  to  the  multiplication 


20  THE    POSTAL    DEFICIT. 

of  this  kind  of  ton-mileage.  The  foregoing  compar- 
isons do  show,  however,  that  an  argument  in  favor 
of  the  reduction  of  the  compensation  now  accorded 
to  railway  companies  for  the  carriage  of  mail  cannot 
properly  be  based  upon  the  contention  that  there 
has  not  been  a  decline  in  the  rate  paid  for  such  serv- 
ice that  is  at  least  equal  to  that  which  has  taken  place 
in  the  average  charges  for  passenger  and  freight  serv- 
ices. They  do  not  show  that,  if  accurate  comparisons 
were  practicable,  it  would  appear  that,  for  equal 
services,  the  average  freight  rate  has  declined  more 
rapidly  than  the  average  mail  rate,  nor  that  the  re- 
verse is  not  the  case.  Much  less  do  they  indicate 
anything  in  regard  to  the  relative  justice  of  the 
charges  imposed  upon  the  different  services. 

RAILWAY     SERVICES      IN      CONNECTION      WITH       MAIL 

TRANSPORTATION. 

In  order  to  furnish  a  basis  for  further  examination 
of  the  conditions  of  railway  mail  service  and  for 
intelligent  conclusions  concerning  what  constitutes 
reasonable  compensation  for  those  services,  it  is  de- 
sirable to  explain  in  some  detail  the  character  of  the 
facilities  which  the  railways  supply,  the  nature  of  the 
services  which  they  perform,  and  the  extent  of  the 
requirements  of  the  Post-office  Department  in  con- 
nection therewith. 

What  are  the  services  represented  by  the  272,714,01 7 
ton-miles  that  represent  the  railway  mail  transporta- 
tion of  1898  for  which  the  railways  received  more 


THE    POSTAL    DEFICIT. 


21 


than  $34,000,000,  or  an  average  of  twelve  and  one- 
half  cents  per  ton  per  mile? 

In  order  to  throw  additional  light  upon  the  char- 
acter and  extent  of  these  services,  the  Post-office  De- 
partment conducted  a  special  weighing  throughout 
the  United  States,  which  was  continued  during  a 
period  of  thirty-five  consecutive  days.  On  the  hasis 
of  this  weighing  it  was  estimate* I  that  the  total 
amounts  of  the  different  classes  of  mail  sent  to  rail- 
roads during  the  year  were  as  follows  : 


Character. 

Pounds. 

Per  cent,  of  all 
mail  of  same 
class. 

First  class , 

72.637,586 
401,790,269 
125,838,025 

86,466,748 

652,063,970 

8,348,582 

76.5.1 

Second  class.   

94.06 

Third  and  fourth  classes 

Government  matter 

86.26 

89.!  )4 

Equipment 

Foreign  mail 

M.34 
100.00 

Total 

1,347,145,180 

Si  i.04 

While  this  quantity  of  mail,  amounting  in  the  ag- 
gregate to  1)7:5,572  tons,  is  a  relatively  small  portion 
of  the  total  traffic  annually  carried  by  American  rail- 
ways,  the  manner  in  which  it  is  transported,  the  facil- 
ities required  for  its  accommodation,  and  the  extra- 
ordinary services  performed  in  connection  with  it 
make  it  a  very  significant  factor  in  railway  business. 

All  mail  delivered  to  railways  is  carried  on  pas- 
senger trains  or  on  special  mail  train-    inn   ;it    p 


22  THE    POSTAL   DEFICIT. 

senger-train  speed,  and  may  be  regarded,  from  the 
point  of  view  of  the  postal  service,  as  of  two  classes, 
viz.,  that  which  is  distributed  previous  to  delivery  to 
the  railways  and  carried  in  closed  pouches,  and  that 
which  is  distributed  during  the  process  of  transpor- 
tation. With  regard  to  the  latter  class,  there  is  an 
important  classification  depending  upon  whether  the 
distribution  is  performed  in  compartments  in  bag- 
gage cars,  or  in  full  postal  cars  run  exclusively  for 
the  transportation  of  mail. 

According  to  Mr.  Victor  J.  Bradley,  Superintendent 
of  Railway  Mail  Service  for  the  Middle  States,  an  ac- 
tual  computation,  covering  221  railway  mail  routes  in 
the  Middle  States  division,  being  all  routes  on  which 
postal  or  compartment  cars  were  run,  showed  in  1897 
that  80.26  per  cent,  of  the  total  weight  of  mail  car- 
ried over  those  routes  was  carried  in  cars  provided 
wTith  space  and  facilities  for  its  distribution  while  in 
transit.  On  this  basis  Mr.  Bradley  estimated  that 
seventy -five  per  cent  of  the  mail  carried  in  that  divis- 
ion was  carried  in  postal  or  compartment  cars,  and 
that,  as  there  is  more  closed  pouch  mail  in  the  second 
division  than  elsewhere,  the  percentage  for  the  entire 
country  must  be  about  eighty-five. 

The  following  statement  shows  the  mail  traffic  car- 
ried on  certain  important  routes,  reduced  to  pounds; 
carried  the  full  length  of  each  route  per  day,  and  the 
proportions  carried  in  each  manner  : 


THE    POSTAL    DEFICIT. 


•_':; 


Poii  n  d  s    carried    full 
length  of  route  daily. 

Per  cent,  carried— 

Rout«'  between- 

In  closed  pouches 
in  baggage  cars. 

Subject    to    distribu- 
tion in  transit  in  — 

Apartment 
cars. 

Full  postal 

New  York  and  Philadelphia 

309,294 

183,876 

105,007 

84,517 

83,058 

14.7 

5.1 

.3 

1.5 

.5 

3.4 

3.1 

.9 

.8 
.8 

81  9 

Philadelphia  and  Pittsburg 

9]  8 

Pittsburg  and  Columbus 

98  8 

Columbus  and  Indianapolis 

97  6 

Indianapolis  and  East  Saint  Louis... 

98.7 

In  spite,  however,  of  the  preponderance  of  mail  in 
postal  and  compartment  cars,  the  diffusion  of  the 
balance  among  numerous  trains  makes  the  closed- 
pouch  service  one  which  involves  considerable  labor 
upon  the  part  of  railway  officers  and  employes. 
Some  idea  of  the  extent  of  this  diffusion  can  be  ffath- 
ered  from  the  fact  that  in  the  Middle  States,  in  1897, 
when  the  number  of  mail  trains  per  diem  was  4.. "76, 
but  617  of  this  number  included  postal  or  compart- 
ment cars,  leaving  3,959  daily  trains  on  which  the 
mail  was  carried  in  baggage  cars.  During  the  year 
1897,  2,654,597  pouches  of  mail  were  handled  by 
railway  employes  <>n  the  Chicago,  Burlington  and 
Quincy  railroad. 

Similar  data  regarding  other  routes  arc  nol  avail- 
able, bul  it  is  in  evidence  that  14.2  percent  of  pas- 
senger-train space  <>n  the  Atchison.  Topeka,  and 
Santa  Fe  railroad  is  occupied  by  mail;  12  per  cent 
on  the  Gulf,  Colorado,  and  Santa  Fejll  per  cent  on 


24  THE   POSTAL    DEFICIT. 

the  Santa  Fe  Pacific,  and  10  per  cent  on  the 
Southern  California.  One-quarter  of  the  space  in 
each  baggage  car  leaving  the  Grand  Central  station, 
in  New  York  city,  according  to  Mr.  Van  Etten,  of  the 
New  York  Central  and  Hudson  River  railroad,  is 
occupied  by  mail. 

The  Government  asserts  the  right  with  regard  to 
all  classes  of  mail,  whether  letters,  newspapers,  mer- 
chandise, weekly,  monthly,  or  quarterly  periodicals, 
to  the  best  service  which  it  is  physically  possible  for 
the  railways  to  render.  Mail  must  be  carried  on  any 
train  selected  by  the  Post-office  Department  regard- 
less of  any  inconvenience  entailed  upon  the  carrier 
or  any  difficulties  that  must  be  overcome.  No  state- 
ment of  this  fact  can  be  stronger  than  the  language 
of  the  law,  which  is  as  follows: 

.  "  The  Postmaster  General  shall,  in  all  cases,  decide  upon 
what  trains  and  in  what  manner  the  mails  shall  be  conveyed." 
.  .  .  .  "  Every  railway  company  carrying  the  mail  shall 
carry  on  any  train  which  may  be  run  over  its  road  and  with- 
out extra  charge  therefor,  all  mailable  matter  directed  to  be 
carried  thereon,  with  the  person  in  charge  of  the  same."  .... 
''And  if  any  railroad  company  shall  fail  or  refuse  to  transport 
the  mails,  when  required  by  the  Post-office  Department  upon 
the  fastest  train  or  trains  run  upon  said  road,  said  compan)' 
shall  have  its  pay  reduced  fifty  per  centum  of  the  amount  pro- 
vided by  law." 

It  naturally  follows  from  the  application  of  the 
principles  which  form  the  basis  of  the  legislation 
quoted  that  the  postal  service  makes  use  of  every 
train  which  can  in  any  way  promote  the  rapid  hand- 
ling of  the  mail.  This  involves  the  utilization  of 
almost  every  passenger  train  traversing  any  part  of 


THK    POSTAL    DEFICIT. 


25 


the  176,727  miles  of  railway  that  have  been  desig- 
nated as  constituting  postal  routes.     Thus  there  were, 

in  1897, 140  trains  per  day  carrying  mail  on  the  route 
between  New  York  an«l  Philadelphia;  111,  between 
Philadelphia  and  Pittsburg;  85,  between  Philadel- 
phia and  Washington;  68,  between  New  York  and 
Dunkirk:  58,  between  Long  Island  City  and  Green- 
port,  and  87,  between  Philadelphia  and  Bethlehem. 
This  dispersion  of  mail  traffic  among  numerous 
trains  has  been  a  marked  feature  of  the  development 
of  the  postal  system.  The  following  statement,  in 
which  all  trains  traversing  less  than  the  entire  routes 
have  been  reduced  to  their  equivalents  in  trains 
passing  over  their  entire  length,  shows  its  progressive 
character : 


Between — 

Number  of  round 
trips  per  week. 

■ 

1875. 

1897. 

New  York  and  Philadelphia 

74 
40 
20 

299 

New  York  and  Dunkirk 

49 

Similar  comparisons  showing  the  expansion  of  the 
postal  system  from  1879  to  1897  are  shown  below  : 


26 


THE   POSTAL   DEFICIT. 


NUMBER   OF    ROUND  TRIPS    PER   WEEK. 


Between- 


Concord  and  White  River  Junction. 

Boston  and  Albany 

New  York  and  Buffalo 

Canandaigua  and  Tonawanda 

New  York  and  Philadelphia 

Atlanta  and  West  Point 

Nashville  and  Hickman 

Glasgow  Junction  and  Glasgow 

Dayton  and  Toledo 

Columbus  and  Pittsburg 

Peoria  and  Rock  Island 

Milwaukee  and  La  Crosse 

Mankato  and  Wells 

Hannibal  and  Sedalia 

Kansas  City  and  Denver 

Topeka  and  Kansas  City 

Union  Pacific  Transfer  and  Ogden. . 

Salt  Lake  City  and  Stockton 

San  Francisco  and  Ogden 

Weverton  and  Hagerstown 

Grafton  and  Parkersburg 

Columbia  and  Greenville 

Cincinnati  and  Chattanooga 

Chicago  and  Milwaukee 

Chicago  and  Burlington , 

Chicago  and  Davenport 

St.  Paul  and  Missoula 

Dubuque  and  Sioux  City 

St.  Louis  and  Atchison : 

St.  Louis  and  Kansas  City 

Little  Rock  and  Arkansas  City 

Houston  and  Orange 

Omaha  and  Oreopolis  Junction 

Valley  and  Stromsburg 

Columbus  and  Norfolk 

Marion  and  Chamberlain 

Flandreau  and  Sioux  Falls 


1879,  1880, 
1881,  or 

1882. 


17.15 
45.11 
46.52 

6. 
107.48 
14. 
14. 

7. 
20.01 
21.49 

6. 
14.3 

6. 
12. 


70 

68 


15 


14 
14 

9 

6 

9 
12 
21 

6. 
16.02 
12. 
22.6 
15.29 

8.73 
12. 
14.4 
26. 

6. 

/. 
12. 

8.5 

7.09 

6. 

6. 


1894,  1895, 

1896,  or 

1897. 


28.75 

90.17 
109.38 

11.84 
299.40 

21. 

18.85 


16. 


30.89 

49.17 

12. 

31.23 

12. 

14. 

14.37 

34.46 

28.46 

6. 

17.92 
21. 
27.73 

9.44 
20.39 
46.02 
50.12 
38.30 

9.67 
17.88 
28.97 
25.47 

9.65 
14. 
23.50 
11.67 
15.22 
12. 
11.64 


THE    POSTAL    DEFICIT.  27 

The  railway  mail  routes  connecting  the  points 
shown  in  the  foregoing  statement  rendered  servii 
directly  to  1,406  post-offices  and  points  of  exchange 
at  tin'  beginning  of  the  period  covered  by  the  com- 
parison,  and  to  1,537,  or  a  number  greater  by  9.3 
per  cent,  at  its  close. 

The  increasing  demand  upon  the  railways  of  the 
country  made  by  the  Post-office  Department  is  sum- 
marized, so  far  as  this  phase  of  development  is  con- 
cerned, in  the  following  statement : 


Year. 

Total   length 
of    railway 

mail   routes 
in  miles. 

Total    annual 
transportation 
in  miles. 

No.  of  miles  of 
annual  trans- 
portation pci- 
mile    of  rail- 
w  a  y      mail 
route-. 

1873 

63,457 
110,208 
166,952 
171,212 
173,475 
176,727 

65,621,445 
129,198,641 

252,750,574 
267,117,7::; 
273,190,356 

in  7, 5*  »1, 269 

1,034 
1,172 
1,514 
1,560 
1.574 
1,627 

1883 

1893 

1895 

1897 

1899 

In  the  foregoing  table  the  figures  in  the  first  col- 
umn show  the  total  number  of  miles  of  railway  uti- 
lized in  the  postal  service,  and  those  in  the  second 
show  the  total  transportation  as  measured  by  num- 
ber of  miles  traversed  by  locomotives  hauling  some 
quantity, great  or  small,  of  mail.  The  third  column 
-how-  the  average  number  of  times  each  mile  of  route 
was  traversed  by  separate  lots  of  mail.  It  appears 
that  the  entire  transportation  of  L873,  as  thus  meas- 


28  THE    POSTAL   DEFICIT. 

ured,  was  equivalent  to  traversing  the  total  route 
mileage  of  that  year  1,034  times,  while  in  1899,  with 
a  railway  route  mileage  178  per  cent  greater  than  in 
1873,  it  was  equivalent  to  traversing  the  total  route 
mileage  1,627  times. 

The  right  claimed  and  exercised  by  the  Post-office 
Department  to  send  mail  on  any  train  which  it  may 
select  also  results  in  the  gravitation  of  preponderat- 
ing portions  of  the  mail  toward  the  most  rapid  and 
consequently  the  most  costly  passenger  trains.  The 
addition  of  a  postal  car  to  a  limited  express  is  fre- 
quently a  source  of  great  difficulty  to  the  operating 
departments,  as  every  additional  car  is  an  obstacle 
to  the  observance  of  schedule  time  and  imposes  an 
additional  and  material  demand  upon  motive  power 
which  can  be  met  only  by  the  considerable  enhance- 
ment of  train  cost.  Under  these  conditions  the  typical 
mail-carrying  train  unquestionably  exceeds  in  speed 
the  average  speed  established  for  passenger  trains. 
How  serious  a  matter  the  requirement  to  furnish 
mail  facilities  in  connection  with  the  fastest  trains 
may  become  is  indicated  by  one  of  the  rules  of  the 
Department  which  requires : 

"  At  all  points  where  the  Department  deems  the  exchange  of 
mails  necessary,  the  speed  of  trains  must  be  slackened  so  as  to 
permit  the  exchange  to  be  made  with  safety." 

The  increase  in  rapidity  of  mail  movement  during 
the  last  three  decades  is  especially  notable.  In  1868 
the  average  running  time  of  the  mail  train  between 
New  York  and  New  Orleans  was  98  hours  and  39 
minutes;  in  1877  it  was  86  hours  and  30  minutes; 


THE    POSTAL   DEFICIT.  29 

in   L887,  51   hours;   and  in  1897,  39  hours  and  10 

minutes  for  one  train  and  43  hours  and  55  min- 
utes for  another.  In  1868  and  1877  there  was  but 
one  train;  in  1887,  two;  and  in  1897,  three.  A 
few  examples  of  increased  speed  of  passenger  trains 
may  be  added,  with  the  observation  that  they  indi- 
cate a  minimum  statement  of  the  advancement  in 
mail  service.  From  1873  to  1898  the  average  time 
ofpassenger  trains  between  New  York  and  St.  Louis 
decreased  from  50  to  30  hours,  and  that  between  New 
York  and  Chicago  from  37  hours  41  minutes  to  26 
hours.  The  average  speed  of  passenger  trains  be- 
tween  Chicago  and  Council  Bluffs  via  the  Chicago 
and  Northwestern  railway  was  22  miles  per  hour  in 
1879  and  32  miles  per  hour  in  1897. 

In  a  letter  of  instructions  dated  December  4, 1897, 
the  Second  Assistant  Postmaster  General  expressed 
the  principle  which  is  the  basis  of  the  Department's 
demands  concerning  mail  traffic  in  the  following 
words : 

11  The  dispatch  of  mails  is  of  such  importance  to  the  public 
that  the  Department  holds  that  it  should  not  be  treated  as  of 
secondary  importance  to  passenger  or  other  traffic." 

The  practical  consequence  of  the  vigorous  asser- 
tion of  this  principle  is  that  passenger,  express,  and 
all  other  business  is  treated  as  secondary  in  import- 
ance to  mail.  Nol  only  does  mail  ero  forward  on  the 
fastest  passenger  trains,  but  if  these  are  run  in  sec- 
tions the  mail  musi  invariably  go  forward  on  the 
first  section.  In  cases  of  accidents  or  delays  from 
snow  blockade-,  washouts,  or  other  causes,  if  one  or 


30  THE    POSTAL    DEFICIT. 

more  trains  are  overtaken  by  a  following  train  and 
are  consolidated  and   run  in  sections  all  mail  cars 
must  be  put  in  the  first  section,  while  the  passengers 
are  hauled  in  those  that  follow.     In  all  cases  of  acci- 
dents it  is  usual  to  take  care  of  the  forwarding  of  the 
mail  ahead  of  all  other  traffic.     Even  in  the  exigen- 
cies which  occasionally  grow  out  of  unforeseen  and 
unavoidable  interruptions  of  business  the  postal  cars 
or  the  compartments  allotted  to  mail  in  baggage  cars 
must  not  be  utilized  for  baggage  or  express.     On  the 
other  hand,  it  is  required  that  if,  for  any  reason,  the 
space  allotted  to  mail  is  insufficient  the  latter  must 
be  allowed  to  encroach  upon  the  space  usually  occu- 
pied by  baggage  and  express.     The  Department  has 
frequently  forced  the  railways  to  attach  postal  cars 
to  trains  supposed  to  be  run  exclusively  for  express 
business,  while  if  the  latter  are  delayed  and  get  in 
the  way  of  mail  trains  they  must  be  side-tracked  to 
allow  the  mail  to  pass.     As  a  further  exa mple,  though 
possibly  an  unusual  one,  of  the  rigorous  enforcement 
of  the  exclusiveness  of  the   mail   service,  it  may  be 
mentioned  that  even  the  General  Superintendent  of 
the  Chicago,  Burlington  and  Quincy  railroad  cannot 
ride  on  the  special  fast  mail  run  over  that  road  with- 
out previously  obtaining  a  permit  from  the  officers 
of  the  Railway  Mail  Service.     Train  schedules  are 
also  frequently  arranged  in  such  a  way,  to  accommo- 
date the  mail,  especially  newspaper  mail,  that  it  is 
impossible  for  the  trains  to  do  a  profitable  passenger 
business.     An  obvious  illustration  is  the  train  from 
Chicago  to  Cairo,  Illinois,  run  over  the  Illinois  Cen- 


THE    POSTAL    DEFICIT.  31 

tral  railroad.  This  train  leaves  Chicago  at  2.50  a.  rn., 
and  carries  tin i  morning  newspapers.  It  is  estimated 
to  cost  the  railroad  eight-five  cents  per  mile  for 
operating  expenses  alone,  and   earns  but  sixty-one 

cents,  of  which  the  mail  pays  ten  :  express,  twenty- 
six  cents,  and  passengers,  twenty-five,  making  a  net 
loss  of  twenty-four  cents  per  mile  run. 

In  this  connection  a  quotation  from  a  letter  written 
by  the  Postmaster  General  to  the  Chairman  of  the 
Committee  on  Post-offices  and  Post-roads  of  the 
House  of  Representatives,  under  date  of  March  29, 
1892,  is  instructive.     He  said,  in  part : 

"  It  is  a  fact  that  other  than  through  willingness  to  co-operate 
on  the  part  of  the  railroads,  the  Post-office  Department  possesses 
no  authority  in  determining  train  schedules 

;'  .  .  .  .  It  never  seems  to  have  heen  contemplated  that 
the  occasion  would  arise  when  the  Department  would  want  to 
fix  its  own  railroad  schedules,  the  natural  expectation  being 
that  the  mails  would  adapt  themselves  to  ordinary  schedules 
rather  than  that,  to  some  extent,  ordinary  schedules  should 
become  secondary  to  the  needs  of  the  mail  service.  It  quickly, 
however,  became  plain  that  the  due  frequency,  the  speed,  and 
the  extent  of  train  service  that  prevailed  from  1878  till  1880 
were  greatly  below  the  needs  of  the  country  ten  years  later, 
and  I  became  impressed  with  the  belief  that  it  was  never  con- 
templated, even  by  those  who  were  most  enthusiastic  in  their 
advoeacyof  the  expansion  of  the  railway  mail  system,  that  its 
extent  would  in  a  few  years  reach  the  proportions  that  have 
prevailed  since  1889.  "...  In  1878  there  did  not  exist  a 
single  railroad-train  schedule  that  the  railroads  felt  obligated 
to  maintain  or  modify  primarily  for  the  advancement  of  the 
mails.  The  Post-office  Department,  everyone  understood,  was 
expected  to  make  the  best  use  it  could  of  schedules  created 
from  the  standpoint  of  the  requirements  of  passenger  and  other 
traffic,  and  as  these  fluctuated  so  the  mail  service  was  expected 
to  change Today  the  conditions  are  altogether  dif- 
ferent, and  there  exists  over  practically  the  entire  arterial  rail- 
way post-office  system  of  the  country  train  schedules  that 
have  heen  fixed  primarily  to  promote  the  mail  service,  and 
these,  except  the  Post-office  Department  consent,  will  not  be 
changed." 


32  THE   POSTAL   DEFICIT. 

The  requirements  that  have  been  enumerated  and 
others  equally  insisted  upon  by  the  Department  are 
enforced  by,  among  other  means,  a  system  of  fines 
which  is  exceedingly  drastic.  The  postal  regula- 
tions on  this  subject  are  as  follows : 

"  Fines  will  be  imposed  unless  satisfactory  explanation  be 
given  in  due  time  for  any  of  the  following  delinquencies  on  the 
part  of  the  railroad  company  : 

"  First.  Failing  to  take  from  or  deliver  at  a  post-office  the  mail 
or  any  part  of  it,  or  to  deliver  the  mail  into  a  post-office  im- 
mediately upon  arrival,  where  the  service  devolves  upon  the 
railroad  company. 

"  Second.  Suffering  the  mail,  or  any  part  of  it,  to  become  wet, 
lost,  injured,  or  destroyed,  or  conveying  it  in  a  place  or  man- 
ner that  exposes  it  to  depredation,  loss,  or  injury. 

"Third.  Refusing,  after  demand,  to  carry  mail  by  any  train. 

"  Fourth.  Leaving  or  putting  aside  mail,  or  any  part  of  it,  to 
the  accommodation  of  passengers,  baggage,  express,  freight,  or 
other  matter. 

"  Fifth.  Leaving  mail  which  arrives  at  the  station  before  the 
departure  of  the  train  for  which  it  is  intended. 

"  Sixth.  Failing  to  use  the  first  practicable  means  of  forward- 
ing mail  which  is  delayed  en  route. 

"  The  fine  will  be  in  each  case  such  sum  as  the  Postmaster 
General  mav  impose,  in  view  of  the  gravity  of  the  delinquency, 
and  will  be  deducted  from  the  compensation  of  the  railroad 
company." 

In  accordance  with  the  foregoing  fines  aggregating 
$1.00,046.90  were  assessed  against  the  mail-carrying 
railways  during  the  fiscal  year  ended  June  30,  1899. 
Of  this  amount  $3,118.58  was  remitted  after  satis- 
factory explanation,  leaving  a  net  deduction  from 
railway  mail  pay  on  account  of  fines  of  $96,928.32. 

POSTAL    AND    COMPARTMENT    CAR    SERVICE. 

As  has  been  indicated,  much  the  greater  portion  of 
the  aggregate  weight  of  mail  is  carried,  subject  to  dis- 


THK    POSTAL    DEFICIT. 


:;:: 


tribution  while  in  transit,  in  full  postal  and  com- 
partment cars.  These  differ  merely  in  the  quantity 
of  space  which  they  afford  and  in  that,  while  the  full 
car  is  run  exclusively  for  mail,  the  compartment  con- 
sists of  space  separated  by  a  partition  from  the  bal- 
ance of  the  baggage  car.  The  space  so  separated  is. 
however,  devoted  exclusively  to  the  mail  service,  and 
the  distinction  last  mentioned  is  frequently  more 
superficial  than  real,  for  it  often  happens  that  the 
demand  of  the  Post-office  Department  for  a  compart- 
ment requires  the  railway  on  which  the  demand  is 
made  to  attach  an  additional  car  to  the  train  affected. 
In  this  case  it  may  not  have  any  use  for  the  portion 
of  the  car  which  is  not  devoted  to  mail. 

The  following  statement  shows  the  number  of  cars 
of  each  kind  in  use  and  in  reserve  during  each  alter- 
nate year  from  1882  to  1898  and  in  1809 : 


Full  postal  cars. 

Compartment  cars. 

Year. 

In  use. 

Iu  reserve. 

In  use. 

In  reserve. 

Total. 

1882 
1884 
L886 
1888 
1890 
1892 
1894 
1896 
1898 
1899 

318 
349 
350 
36H 
439 
500 
550 
622 
701 
729 

24 
102 
85 
91 
103 
139 
175 
L54 
L80 
L92 

L,229 

1.219 
1,362 
1,616 
1,760 
1,867 
L,911 
1,996 
2,082 
2,04<i 

340 
4«i7 
416 
17"» 
506 
526 
546 
553 
539 

1,804 
2,010 

2.2UI 

2,489 

2.777 

3,012 
3,162 
3,318 
3,516 
3,506 

34 


THE    POSTAL    DEB^ICIT. 


Data  showing  the  number  of  cars  in  use  prior  to 
1882  are  not  at  hand,  but  the  following  statement 
showing  the  number  of  routes  over  which  postal  cars 
were  run  in  the  years  named  and  the  number  of 
miles  included  indicates  the  growth  of  this  service. 
The  data  refer  to  full  postal  cars  only  and  do  not  in- 
clude compartment-car  service. 


ROUTES   OVER    WHICH    FULL    POSTAL    CARS    WERE    RUN. 


Year. 

Number. 

Length  in 
miles. 

Percentage  of 
total  length 
of  postal 
routes. 

1873 

59 
153 
216 
237 
228 
223 
238 

14,866 
25,571 
35,153 
37,693 
39,494 
40,463 
43,178 

23.43 

1883 

23.20 

1893 

21.06 

1896 

1 897 

21.81 
22.77 

1898 

23.15 

1899 

24.43 

The  growth  of  this  service,  including  compart- 
ment as  well  as  full  postal  cars,  is  in  some  degree 
indicated  by  the  number  of  traveling  postal  clerks 
employed.     Such  data  are  shown  below : 


Year. 

Number  of 
postal  clerks. 

Year. 

Number  of 
postal  clerks. 

1875 

2,238 
2,946 
4,387 

1890 

5,836 

1880 

1895 

7,045 

8,388 

1885 

1899. 

THE    POSTAL    DEFICIT.  35 

The  number  of  pieces  of  mail  handled  increased  from 
1SSS  to  1899  from  6,528,772,060  to  L3,351,992,725, 
and  the  number  of  miles  traveled  per  annum  by 
cars  in  winch  mail  was  distributed  increased  from 
52,419,773  in  1879  to  183,585,612  in  L898.  This 
mileage  was  56.31  percent  of  the  total  number  of 
miles  traveled  by  cars  containing  mail  in  the  former 
and  65.15  per  cent,  in  the  latter  year. 

Mr.  Loud,  t he  experienced  chairman  of  the  Com- 
mittee on  Post-offices  and  Post-roads  of  the  House  of 
Representatives  and  an  unquestioned  authority  on 
postal  progress,  has  summarized  these  facts  in  the 
statement  that  "  the  tendency  every  year  is  to  secure 
greater  space  or  less  weight  for  mail  because  greater 
distribution  is  being  demanded  every  year."  As 
early  as  L892  the  Postmaster  General  in  a  signed 
statement  declared  : 

"The  enormous  development  of  mail  distribution  in  railway 
post-offices,  which,  as  the  name  implies,  arc  fully  equipped 
traveling  post-offices  taking  on  and  putting  out  mail  every  few 
miles  both  night  and  day,  lias  been  the  product  of  hearty  co- 
operation between  the  Post-otlice  Department  and  the  princi- 
pal railways  of  the  country,  and  .  .  .  the  facilities  required 
now  are  many  times  greater  than  they  were  at  the  time  the 
present  rates  were  fixed,  and  it  is  believed  the  calls  the  Depart- 
ment makes  upon  the  railroads  now  are  in  excess  of  anything 
it  was  expected  the  service  would  need.  .  .  .  Fifteen 
years  ago  the  largest  share  of  the  mail  service  of  the  country 
was  by  mean-  of  closed  or  direct  pouchings,  and  when  railway 
post-offices  were  run  it  was  exceptional  t<»  have  them  oftener 
than  once  daily  in  each  direction.  There  was  a  time  when 
tin'  position  was  taken  by  many  railroads  and  partially  con- 
ceded by  the  Department  that  notwithstanding  they  were 
obligated  t<>  carry  the  mails  upon  all  trains,  the  obligation  did 
not  extend  to  the  providing  of  an  unlimited  extent  of  apart- 
ment space  or  nmre  frequently  than  six  times  a  week  :  but 
this  claim  has  been  virtually  abandoned,  there  being  but  a  few 
instances  in  which  the  railroads  are  not  willing  to  grant  Buch  a 
degree  of  post-office  space  as  the  Department  decides  is  neces- 
sary. 


36  THE   POSTAL    DEFICIT. 

"  Today  the  railway  post-office  system  is  general,  and  instead 
of  once  daily  many  of  the  lines  are  doable  daily  ;  and  it  is  only 
for  lack  of  appropriation  that  we  are  prevented  from  applying 
double  daily  railway  post-office  service  to  practically  all  the 
railroad  lines  on  which  the  railway  post-office  operates.  In 
connection  with  large  cities  the  railway  post-office  on  some 
lines  runs  as  frequently  as  three,  four,  or  five  times  daily. 
Each  service  of  this  kind  is  attended  with  considerable  direct 
expenditure  by  the  railroad.  Every  railway  mail  service  re- 
quires at  least  an  apartment  of  a  car,  for  which  there  is  no 
special  compensation,  and,  as  the  frequency  of  this  service  is 
not  necessarily  occasioned  by  an  immediate  marked  growth  in 
the  weight  of  the  mails,  the  railroads  are  deserving  of  a  good- 
measure  of  praise  for  the  promptness  with  which  they  incur 
the  increased  cost,  sometimes  imposed  upon  them  by  the  De- 
partment in  its  eagerness  to  render  the  mail  service  more  and 
more  complete.  The  Department,  in  its  efforts  to  render  the 
mail  service  more  perfect,  frequently  proceeds  on  its  own  lines, 
not  deeming  it  essential  to  give  special  consideration  to  the 
outlays  to  be  incurred  by  the  railroads." 

The  law  under  which  the  mails  are  carried  by  the 
railways  enumerates,  among  the  conditions  which 
must  be  met  bv  the  carriers,  "  that  sufficient  and 
suitable  room,  fixtures,  and  furniture,  in  a  car  or 
apartment  properly  lighted  and  warmed,  shall  be 
provided  for  route  agents  to  accompany  and  distrib- 
ute the  mails."  The  postal  regulations  are  still  more 
explicit,  but  must  be  regarded  as  merely  a  more  de- 
tailed statement  of  the  legal  requirements,  and  are 
so  accepted  by  the  railway  companies.  The  follow- 
ing quotation  is  from  the  postal  regulations : 

"That  all  cars  or  parts  of  cars  used  for  the  railway  mail 
service  shall  be  of  such  style,  length  and  character,  and  fur- 
nished in  such  manner,  as  shall  be  required  by  the  Postmaster 
General,  and  shall  be  constructed,  fitted  up,  maintained,  heated, 
and  lighted  by  and  at  the  expense  of  the  railroad  companies." 

As  a  consequence  of  the  application  of  the  rules 
that  have  been  quoted,  postal  and  compartment  cars 
are    invariably   built,    equipped,    and    maintained 


THE    POSTAL   DEFICIT.  37 

under  conditions  which    amount,  substantially,  to 

complete  control,  even  of  the  most  minute  details,  on 

the  part  of  the  Department,     The  feeling  on  the  pari 

of  railway  officers  in  regard  to  this  matter  is  well 

represented  by  a  quotation  from  the  testimony  of  Mi-. 

Kruttschnitt,  vice-president  and  general  manager  of 

the  Southern  Pacific  railroad,  before  the  Joint  Postal 

Commission.     He  said  : 

"  Xot  over  two  months  ago  the  question  was  taken  up  with 
us  by  the  Department  of  providing  some  new  postal  cars.  To 
avoid  misunderstanding,  I  requested  the  railway  mail  superin- 
tendent to  take  the  question  up  direct  with  our  superintendent 
of  motive  power.  I  said:  '  You  show  us  exactly  in  drawings 
what  the  Department  wishes.  We  don't  want  any  hereafter 
about  it  or  complaints  that  the  car  is  not  just  as  you  want  it. 
Now,  make  your  own  plans.'  I  gave  him  free  entry  to  our 
drafting-rooms  and  shops,  and  in  conference  with  the  superin- 
tendent of  motive  power  the  plan  for  the  new  cars  was  made." 

Postal  cars  are  built  more  substantially  than  any 
others  in  railway  service,  except  parlor  and  sleeping 
cars,  and  are  in  every  respect  equal  to  the  latter. 
Though  there  are  doubtless  some  lighter  ears  of  old 
construction  still  in  use,  the  standard  postal  ear  now 
weighs  from  80,000  to  100,000  pounds.  The  follow- 
ing comparative  weights  relate  to  the  newer  equip- 
ment of  the  Atchison,  Topeka  and  Santa  Fe  railroad, 
and  may  be  regarded  as  typical  of  recent  construction 
at  least  in  the  region  traversed  by  that  road  : 

WEIGHT    OF    EQUIPMENT, 

Postal  car 94,300  pounds. 

Express  car 63,700 

Baggage  ear 65,400 

Passenger  coach 65,300 

Chair  car 67,600 

Tourist  sleeper Km. nun 

Pullman  sleeper ]  20,000 


a 
1 1 
t  < 


38  THE    POSTAL    DEFICIT. 

The  postal  laws  declare  that  the  cars  or  compart- 
ments devoted  to  mail  distribution  shall  be  properly 
lighted  and  warmed,  as  well  as  supplied  with  suitable 
fixtures  and  furniture.  Under  this  law  the  railway 
companies  are  compelled  to  supply  the  cars  with  pat- 
ent devices  for  handling,  loading,  and  unloading 
mail  sacks;  with  patent  devices  for  catching  the  mail, 
and  with  nettings  over  the  windows  to  keep  cinders 
out  of  the  cars.  These  cinder  devices  cost  twelve 
dollars  per  car.  In  a  car  having  a  floor  space  of  nine 
by  sixty  feet,  the  Southern  Pacific  Company  was  re- 
cently compelled  to  place  nine  chandeliers  of  four 
lights  each,  or  a  total  of  thirty-six  Pintsch  gas  lights, 
to  provide  for  a  total  area  of  only  540  square  feet. 
The  general  superintendent  of  the  New  York  Central 
and  Hudson  River  railroad  testified  that  it  cost  an 
average  of  17|  cents  per  hour  to  light  mail  cars,  as 
against  an  average  of  eight  cents  per  hour  for  passen- 
ger coaches.  The  expenditures  for  heating  and 
lighting  postal  cars  are  greatly  enhanced  by  the  fact 
that  these  cars  have  frequently  to  be  placed  at  the 
disposal  of  the  postal  employes  many  hours  before 
the  starting  time  of  the  trains  to  which  they  are  to  be 
attached.  In  one  case  reported  by  the  Illinois  Cen- 
tral railroad,  the  postal  cars  are  occupied  by  the 
postal  clerks  and  must  be  fully  heated  and  lighted 
for  full  six  hours  and  fifty  minutes  before  leaving  the 
terminal. 

The  ordinary  fixtures  in  a  sixty-foot  postal  car 
weigh  about  4,350  pounds,  and  those  in  a  twenty-two 
foot  compartment  about   4,230  pounds.     These  fix- 


•  THE    POSTAL   DEFICIT.  39 

tures  occupy  about  two-thirds  of  the  space  in  each 
car,  and  their  weight  slightly  exceeds  that,  at  least 
for  full  cars,  of  the  mail  that  is  carried.  The  addi- 
tional furniture,  supplied  by  and  at  the  expense  of 
the  railway,  consists  of  chairs,  feather  dusters,  clothes- 
presses,  and  similar  conveniences.  The  <•<  >s1  of  |  >ostal 
cars  was  variably  stated  by  different  witnesses  before 
the  Joint  Postal  Commission  at  from  about  $3,000  on 
the  Flint  and  Pere  Marquette  railroad,  which  has 
but  one,  to  §0,000  on  the  Illinois  Central  railroad. 
There  can  be  very  few,  if  any,  which  have  been  con- 
structed at  the  lower  figure,  and  those  must  be  of  the 
older  type.  Mr.  Kenna,  vice-president  of  the  Atchi- 
son, Topeka  and  Santa  Fe  railroad,  which  builds  its 
own  cars,  testified  that  the  cost  charged  on  the  books 
of  the  company  for  the  last  one  constructed  was 
$4,584,  while  Mr.  Erastus  Young,  general  auditor  of 
the  Union  Pacific  system,  declared  that  his  company 
operated  twenty-five  full  postal  cars  with  a  floor  ca- 
pacity of  12,734  feet,  which  had  cost,  in  the  aggre- 
gate, $129,588,  or  an  average  per  car  of  $5.LS4. 
Probably  the  witness  best  able  to  speak  on  this  sub- 
ject with  general  authority  was  Mr.  Wickes,  vice- 
president  of  the  Pullman  Company,  who  testified 
that  his  concern  had  recently  built  sonic  sixty-foot 
postal  cars  at  costs  ranging  from  $5,400  to  $5,900, 
and  some  fifty-foot  postal  cars  ;it  S.">. •_>()(>.  lie  stated 
that  sixty-foot  baggage  cars  built  by  his  company 
cost  from  $3,800  to  $4,200.  The  same  authority  de- 
clared that  the  annual  cost  of  maintaining  a  sixty- 
foot  postal  car  would  be  about  $1,000,  adding  thai  ;i 


40  THE    POSTAL   DEFICIT.  * 

large  part  of  the  cost  of  car  maintenance  consists  of 
keeping  running  gear  in  order,  and  that  the  latter  is 
as  costly  for  a  postal  car  as  for  a  Pullman  sleeper. 

Two  mail-catchers  constitute  a  necessary  part  of 
the  equipment  of  each  postal  car,  under  modern 
methods,  and  must  have  their  complementary  mail 
cranes  at  the  points  where  they  are  to  act.  Mail 
cranes  are  more  numerous  than  mail-catchers,  the 
proportion  on  the  line  of  the  Chicago  and  North- 
western railway,  for  example,  being  262  of  the  for- 
mer to  150  of  the  latter.  The  cost  of  mail  cranes  on 
the  Union  Pacific  system  was  about  $18.57  each,  and 
that  of  catchers,  $7.50  each.  The  expense  of  main- 
taining and  repairing  catchers  alone  from  July  to 
November,  1898,  was  at  the  rate  of  $16.00  per  an- 
num. 

TRAVELING  POST-OFFICES. 

The  postal  car  and  the  compartment  car  have 
superseded  the  distributing  offices  which  were,  at 
one  time,  a  prominent  feature  of  American  postal 
practice.  An  order  of  April  30,  1859,  discontinu- 
ing 13  of  the  150  distributing  offices  which  were 
then  in  existence,  is  regarded  by  the  author  of  the 
"History  of  the  Railway  Mail  Service,"  which  was 
published  in  1885,  as  marking  the  beginning  of  the 
new  system.  The  following  is  quoted  from  that 
history : 

"  The  discontinuance  of  distributing  offices  was  coincident 
with  the  establishment  of  railway  post-offices.  Instead  of  send- 
ing mail  to  be  delayed  from  ten  to  twenty-four  hours  at  points 
on  the  way,  the  practice  of  direct  mailing  was  substituted,  and 


THE    POSTAL    DEFICIT.  41 

the  abuses  which  had  crept  into  the  service  through  the  dis- 
tributing post-offices  were  in  part  corrected.  The  high  com- 
missions which  were  allowed  formerly  were  cut  off.  The 
order  of  April  30,  1859,  therefore,  marks  an  epoch  in  the  his- 
tory of  the  postal  service  of  the  country,  in  that  it  was  an  im- 
portant economical  measure,  not  only  removing  a  heavy  bur- 
den from  the  revenues  of  the  Department,  but  greatly  accel- 
erating the  mails,  preparing  the  way  for  the  improvements  in- 
troduced by  the  changed  condition  of  transportation." 

Superintendent  Bradley  is  authority  for  the  state- 
menl  that,  at  the  present  time,  mail  for  every  State 
and  Territory  in  the   Union,  with  the  exception  of 

Arizona,  Nevada,  New  Mexico,  North  Dakota,  and 
Utah,  is  separately  handled  and  sorted,  piece  by 
piece,  on  the  postal  cars  between  New  York  and  Chi- 
cago and  Saint  Louis.  On  the  basis  of  weight,  ninety 
per  cent,  of  the  mail  between  these  points  is  assorted 
on  the  trains  and  only  ten  per  cent,  goes  through 
intact.  InDecember,  1898,a  calculation  concerning 
the  westward-bound  mail  out  of  Xew  York  was  made 
for  the  purpose  of  determining  whether  a  sufficient 
amount  of  through  mail  could  be  segregated  to  war- 
rant the  Department  in  asking  for  competitive  bids. 
The  result  of  this  effort  was  the  discovery  that  the 
average  daily  weight  of  all  made-up  mails,  not  re- 
quiring distribution  in  transit,  was  only  fifteen  thou- 
sand pounds,  and  that  even  this  quantity  was  pro- 
vided for  by  six  or  eight  separate  dispatches.  To 
-  ure  the  absolutely  five  transportation  of  this  rela- 
tively unimportant  quantity  would  have  had  an  al- 
most inappreciable  effect  upon  the  total  payment, 
but  tic  delay  incident  to  it-  consolidation  into  a 
single  shipment  would  doubtless  have  been  produc- 

4 

I 


42  THE    POSTAL    DEFICIT. 

tive  of  serious  inconvenience  and  the  cause  of  imme- 
diate complaint. 

The  development  of  the  railway  post-office  since 
its  inception  has  been  progressive  and  rapid.     Not 
only  is  mail  distributed  with  regard  to  the  city  or 
town  to  which  it  is  destined,  but  it  is  frequently  pre- 
pared  for  immediate  distribution  to  separate  sub- 
stations and  to  individual  mail-carriers  in  the  free- 
delivery  cities.     The  great  mail  trains  which  reach 
the  city  of  Chicago  every  morning  carry  the  mail 
into  that  city  in  such  condition  that  that  portion 
which  goes  to  the  business  section  is  actually  ready 
for  the  carriers,  while  the  balance  is  sorted  and  ar- 
ranged to  go  to  the  respective  stations   serving  the 
urban   and  suburban   residence  regions.     For  this 
purpose  the  Chicago  mail  must  be  arranged  in  about 
175  lots,  which  means  that  there  must  be  space  in  the 
postal  cars  to  hang  175  open  pouches.     With  regard 
to  the  outgoing  mail  from  a  city  like  Chicago,  it  is 
evident  that  with  the  increase  in  the  number  of  post- 
offices  in  the  country  from  33,244,  in  1873,  to  75,000, 
in  1899,  the  distribution  of  mail   in   the   office  in- 
stead of  in  the  cars  would  not  only  result  in  serious 
delays,  but  also  in  the  addition  of  enormous  weights 
of  pouches  to  the  total  weight  carried  by  the  rail- 
ways.     Similar  results  would   occur  in  about  the 
same  proportion    to  the  total   volume  of  outgoing 
mail  at  nearly  every  post-office.     In  the  words  of  a 
witness  before  the  Joint  Postal  Commission,  "  there 
would  be  a  great  deal  more  leather  than  mail." 
Even  as  early  as  1874  Mr.  Bangs,  the  General  Su- 


THE    POSTAL    DEFICIT.  4o 

perintendent  of  the  Railway  Mail  Service,  and  the 
man  to  whom,  above  all  others,  is  due  the  credil  for 
tin'  present  perfection  of  this  branch  of  the  postal 
service,  said  that — 

"The  effect  of  the  trunk  lines  suspending  the  running  of 
postal  cars  would  be  to  force  the  Government  in  the  city  of 
New  York  to  hire  three  or  four  large  warehouses  to  do  the  mail 
distribution  that  they  now  do  upon  the  railway  trains." 

At  about  the  same  time  Mr.  Davis,  the  Assistant 
Superintendent,  testified  that  the  effect  of  the  discon- 
tinuance of  postal  cars  would  be — 

"To  tli row  into  the  principal  post-offices  such  a  mass  of 
matter  that  they  would  have  no  accommodations  for  it.  With 
the  limited  accommodations  they  have  they  could  not  work  a 
force  sufficient  to  distribute  in  good  time.  It  would  involve  a 
very  annoying  delay." 

When  the  railways  protested  against  the  payment 
provided  in  the  law  of  1873,  and  the  postal  authori- 
ties feared  that  they  would  be  compelled  by  Con- 
gressional parsimony  to  return  to  the  antiquated 
system,  the  postmaster  of  the  city  of  New  York  went 
before  the  House  Post-office  Committee,  which  was 
considering  the  question,  and  stated  that  to  go  back 
to  tie-  former  mode  of  distributing  mails  and  making 
up  pouches  in  the  post-offices  only  would  necessitate 
a  building  in  the  city  of  Now  York  that  would  cover 
all  the  ground  from  the  city  hall  to  the  Battery,  util- 
izing all  the  space  that  could  be  had  if  the  building 
was  six  stories  high,  and  even  then  tie-  delay  of  the 
mail  passing  through,  as  well  ;i-  that  originating  and 
ending  in  Now  York  city,  would  bo  many  hours. 

Coming  to  a  more  recent  period,  the  present  utili- 


44  THE    POSTAL    DEFICIT. 

zation  of  the  traveling  post-offices  can  be  set  forth  in 
a  few  pertinent  quotations  from  officers  of  the  Post- 
office  Department.  In  1896  the  Second  Assistant 
Postmaster  General  said : 

"  Marked  as  is  the  improvement  in  the  rapid  transit  of  mails, 
effected  through  the  combined  efforts  of  the  Department  and 
the  carriers,  perhaps  the  most  noteworthy  feature  is  the  extent 
to  which  the  distribution  in  the  railway  post-offices  is  now  car- 
ried. No  longer  content  with  delivering  into  the  larger  post- 
offices  the  mail  addressed  thereto,  the  railway  post-office  now 
separates  and  arranges  for  immediate  delivery  by  the  letter- 
carriers  in  larger  cities  an  immense  and  constantly  increasing 
volume  of  mail  to  the  extent  of  making  it  almost  possible  to 
supply  the  letter-carriers  from  the  postal  car  on  its  arrival  with 
the  mail  intended  for  their  personal  distribution,  which  prac- 
tically eliminates  a  very  large  amount  of  work  that  was  for- 
merly done  in  the  post-office  buildings. 

"  More  and  more  of  the  work  formerly  performed  in  the  city 
post-offices  is  thus  transferred  to  the  railway  post-offices,  the 
effect  of  which  should  be  kept  well  in  view  when  considering 
the  necessity  for  increasing  appropriations  for  this  branch  of 
the  service,  "the  idea  being  that  expenditures  of  this  nature  will 
not  only  increase  the  efficiency  of  the  mail  service,  but  will 
greatlv  decrease  the  amount  required  for  increasing  Govern- 
ment buildings  intended  for  post-office  purposes  ' 

Nor  is  it  proposed  that  the  development  of  the  rail- 
way mail  service  shall  cease  with  what  has  been  ac- 
complished. The  officers  of  the  Department  are 
looking  forward  to  still  greater  achievements  in  the 
service  of  the  public.  The  direction  these  improve- 
ments will  take  is  already  clearly  indicated,  and  it 
is  evident  that  they  will  impose  upon  the  railways 
relatively  greater  demands  for  facilities  and  space. 
The  following  is  from  the  annual  report  of  the  Post- 
office  Department  for  the  year  1895  : 

"  It  is  the  intention  eventually  to  absorb  all  the  work  of  city 
distribution  into  the  railway  mail  service  whenever  the  mails 
can  be  expedited  thereby." 


THE    POSTAL    DEFICIT.  4") 

In  1899,  the  present  Second  Assistant  Postmaster 
( reneral  said  : 

'•  Some  day,  if  I  live  long  enough,  I  hope  to  show  you  how 
the  car  and  wagon  will   dispense  with  the  big  city  post-offices. 
The  postmaster  at  New  York  said  to  me  a  few  days  ago  that  if 
we  were  not  doing  what  we  are  doing  on  wheels  he  could  not 
handle  his  mail  in  New  York." 

It  follows  as  a  not  unnatural  consequence  of  the 
extent  in  which  the  work  of  separating  and  distribut- 
ing the  mails  has  been  transferred  from  the  post- 
office  proper  to  the  cars  supplied  by  railway  carriers  ; 
that  the  time  occupied  in  running  over  the  railway 
mail  routes  traversed  by  single  crews  of  postal  clerks 
is  inadequate  for  the  accomplishment  of  the  labors 
assigned  to  them.  Two  remedies  for  this  condition 
arc  equally  obvious,  but  only  one  of  them  is  really 
available  to  the  Department.  More  men  could  be 
pat  on  the  cars  and  greater  space  supplied  for  the 
work  of  distribution  in  transit,  but  the  Department 
needs  all  of  the  money  it  can  secure  for  additional 
and  improved  service,  and  therefore  this  remedy, 
though  conceivable,  is  not  actually  practicable.  The 
other  remedy  is  to  secure  the  use  of  the  cars  during 
a  longer  period,  which  means  that  they  must  be 
available  for  use  for  whatever  period  is  necessary 
before  they  start.  This  practice  has  hoc. .mo  quite 
common,  and,  as  will  he  evident,  imposes  upon  the 
railways  the  uecessity  of  providing  more  equipment 
than  would  otherwise  he  required.  For  example, 
the  fast  mail  for  the  South  leaves  Chicago  at  2.50  in 
the  morning,  hut  the  car-  must  he  placed  in  position 
and  be  ready  fur  the  postal  clerks  to  commence  the 


46  THE    POSTAL    DEFICIT. 

distribution  of  mail  at  eight  o'clock  of  the  previous 
evening.  The  corresponding  train  from  the  South 
arrives  in  Chicago  at  midnight,  and  there  would  be 
no  difficulty  in  sending  the  same  postal  cars  back 
three  hours  later  if  this  equipment  was  not  required 
for  use  in  the  station  before  leaving.  Similar  use  of 
postal  cars  is  made  at  the  termini  of  nearly  every 
route,  and  in  at  least  one  case  the  cars  are  made 
ready  full  twelve  hours  before  leaving  time.  The 
space  required  at  important  terminals  for  this  pur- 
pose is  a  by  no  means  negligible  item. 

The  average  quantity  of  mail  that  is  carried  in  a 
full  postal  car  unquestionably  approximates  two  tons, 
though  at  least  one  competent  and  experienced  divis- 
ion superintendent  of  the  Railway  Mail  Service  thinks 
that  it  does  not  exceed  3,500  pounds.  There  is  some 
doubt  concerning  the  limits  within  which  the  items 
that  make  up  the  aggregate  from  which  this  average 
is  obtained  range,  but  there  is  evidence  that  the 
average  of  a  particular  route,  on  the  Great  Northern 
railway,  is  as  low  as  1,700  pounds,  and  that  one  train 
of  three  cars  on  the  Chicago,  Burlington  and  Quincy 
carries  but  3,945  pounds,  or  less  than  seven-tenths  of  a 
ton  per  car.  On  the  other  hand,  there  are  routes  on 
which  the  average  runs  as  high  as  three,  and  in 
one  case  at  least  to  3.87,  tons  (including  mail  in 
storage  cars)  per  postal  car,  the  former  being  on  the 
Pennsylvania  railroad  and  the  latter  on  the  Chicago, 
Burlington  and  Quincy  railroad.  The  fact  that  cars 
ranging  from  forty  to  sixty  feet  in  length  and  weigh- 
ing from  80,000  to  100,000  pounds  never — at  least, 


THE    POSTAL    DEFICIT.  47 

only  in  vary  rare  instances — carry  a  paying  load  of 

as  much  as  four  tons,  and  that  the  average  is  as  low- 
as  two  tons,  would  require  an  elaborate  explanation 
had  it  not  already  been  made  clear  that  the  mail- 
carrying  capacity  of  postal  and  compartment  cars 
has  been  made  subservient  to  the  requirement  that 
these  cars  shall  contain  complete  facilities  for  mail 
distribution  and   ample  room   for  the  accommoda- 
tion of  the  employes  who  must    perform  the  work. 
These  requirements  prevent  anything  like  loading 
to  the  full  capacity  of  the  cars  as  mere  carriers  of 
bulk  or  weight.     Mr.  Troy,   Superintendent  of  the 
Sixth  Division  of  the  Railway  Mail  Service,  who  has 
had  experience  as  a  traveling  postal  clerk,  declare  - 
that  it  requires  two  clerks  to  work  3.500  pounds  of 
mail  in  a  car;  that  four  tons  of  mail  would  crowd  a 
letter  car,  and  that  an  ordinary  force  would   find  it 
impossible  to  work  in  a  car  containing  six  tons  of 
mail.     As  the  maximum    must    always  materially 
exceed  the  average  not  only  on  account  of  the  im- 
possibility of  planning  so  as  to  secure  an  absolute 
balance  between   facilities  and  traffic,  but   also   for 
what    is    probably    in    this    case    the    more    potent 
reason,  that  the  weighl  of  mail   in  a  postal  ear  in- 
variably diminishes  as  its  journey   progresses,  it   is 
p  irfectly  evident  that  the  averages  g iven  are  not  un- 
reasonably low.     The  fluctuation  in  volume  of  mail, 
which  Superintendent   Bradley  says  amounts,  in  the 
mail  dispatched  from  New  York  city.  t<>  a  variation 
of  sixty   per  cent,   from  day  t<»  day,  also  serves  to 
diminish  the  average,  because  facilities  must  always 


48  THK    POSTAL    DEFICIT. 

be  ample  for  the  heaviest  mail  that  may  be  dis- 
patched at  any  time. 

If  anything  further  were  required  to  establish  the 
fact  that,  as  Professor  H.  C.  Adams  has  declared,  "the 
character  of  the  service  rendered  by  postal  cars  is  es- 
sentially different  from  the  service  of  transporting 
mail,"  it  ought  to  be  found  in  the  following  quotation 
from  a  letter  written  by  the  Second  Assistant  Post- 
master  General  during  February,  1897  : 

"On  the  Pennsylvania  railroad,  in  a  special  train  of  six  cars 
entirely  for  Department  nse,  four  of  them  are  postal  cars,  paid 
for  by  the  Department,  and  the  other  two  are  storage  cars  which 
are  not  paid  for.  The  total  weight  of  mail  carried  in  the  six- 
cars  is  70,513  pounds,  or  35  tons,  a  load  which  could  easily  he 
carried  in  the  storage  cars  without  the  expense  of  the  postal 
cars  if  the  Government  does  not  care  to  do  post-office  work  en 
route.  In  the  case  of  trains  with  only  one  postal  car,  the  mail 
so  hauled,  were  it  not  for  the  Government  necessities  of  work- 
ing in  transit,  would  find  a  place  in  the  ordinary  baggage  car 
without  the  expense  to  the  railroad  of  hauling  the  postal  car. 
I  think  this  will  illustrate  to  you  that  the  railroads  really 
have  no  use  for  the  postal  car  that  we  require  them  to  furnish, 
equipped  in  such  manner  that  they  cannot  possibly  be  used  for 
any  other  purpose." 

It  would  be  a  great  mistake  to  assume  that  the  ob- 
servation that  there  is  an  essential  difference  between 
a  simple  transportation  service  and  that  rendered 
by  postal  cars  is  properly  applicable  to  the  postal 
car  only.  The  compartment  car  is  a  diminutive 
postal  car,  and  differs  from  the  latter  merely  in  size 
and  in  the  legal  status  assigned  to  it  by  Congress, 
which  denies  a  similar  standing  with  the  full  postal 
car  in  regard  to  compensation.  Only  eighteen  inches 
of  the  entire  length  of  a  twelve-foot  compartment  are 
available  for  storing  mail,  and  in  *a  thirty-foot  com- 


THE    POSTAL    DEFICIT.  49 

partment,  the  largest  in  use.  but  eight  feet  and  four 
and  one-half  inches  are  available  for  that  purpose.  In 
fact,  when  the  extraordinary  services  performed  in 
connection  with  all  mail,  including  that  carried  in 
closed  pouches, are  considered, there  is  no  justification 
left  for  the  contention  that  railway  mail  services  are 
merely  those  of  moving  a  certain  weight  ot  hulk  of 
mail,  and  as  such  are  comparable  with  ordinary  trans- 
portation services. 

MESSENGER     SERVICE. 

The  performance  of  what  is  known  as  messenger 
service  by  the  railways  which  carry  mail  is  a  curious 
example  of  the  survival  of  a  practice  long  after  the 
circumstances  out  of  which  it  arose  have  ceased  to 

exist. 

In  the  days  when  the  mails  were  carried  in  stage 
coaches  it  was  a  comparatively  simple  expedient  to 
require  the  vehicles  to  turn  aside  from  their  regular 
routes  and  proceed  moderate  distances  from  the  direct 
roads  iu  order  to  save  the  Department  the  expense  ami 
difficulty  of  providing  messengers  and  means  of  con- 
veyance  between  the  routesand  the  post-offices  located 
short  distances  therefrom.  It  is  not  probable  that 
the  number  of  these  divergences  was  ever  very  great 
under  the  turnpike  and  stage-coach  system,  and  the 
extreme  distance  which  tie-  Latter  should  he  required 
to  go  out  of  its  way  in  anv  case  was  fixed  at  eighty 
rods  or  one-quarter  of  a  mile.  Tin-  requirement 
was  not  abandoned  when  the  greater  portion  of  mail 
transportation  was  transferred   to  the  railways,and 


(. 


50  THE    POSTAL    DEFICIT. 

the  latter  are  still  required  to  provide  means  for  the 
transfer  of  mail  between  their  stations  and  all  post- 
offices  located  not  more  than  one-quarter  of  a  mile 
therefrom.  Like  everything  else  that  the  railways 
do  for  the  Department,  this  service  is  performed 
under  conditions  laid  down  and  rigidly  enforced  by 
the  officers  of  the  postal  service.  The  following  ex- 
tract from  section  713  of  the  Postal  Laws  and  Regu- 
lations is  illustrative  of  this  fact : 

"At  places  where  the  railroad  companies  are  required  to  take 
the  mails  from  and  deliver  them  into  post-offices  or  postal  sta- 
tions, the  persons  employed  by  the  railroad  companies  to  per- 
form such  service  are  agents  of  the  companies  and  not  employes 
of  the  postal  service,  and  need  not  be  sworn  as  employes  of 
such  service  ;  but  must  be  more  than  16  jrears  old  and  of  suit- 
able intelligence  and  character.  Postmasters  will  promptly 
report  to  the  proper  division  superintendent  of  the  Railway 
Mail  Service,  or  the  General  Superintendent  thereof,  any  viola- 
tion of  this  requirement." 

General  Shallanberger  states  that  the  railways  are 
compelled  under  this  system  to  furnish  messenger 
service  at  20,000  stations,  or  else  to  see  that  the  post- 
master himself  handles  the  mail,  and  that  this  leaves 
but  7,000  stations,  distant  more  than  eighty  rods,  at 
which  the  service  is  performed  by  agencies  provided  I^a 
by  the  Department.  This  requirement  extends  to 
the  transfer  of  mails  between  different  railway  lines 
when  the  stations  are  not  more  than  eighty  rods 
apart. 

The  number  of  stations  and  the  number  at  which 
the  railways  and  the  Government  respectively  fur- 
nish messenger  service  is  given  below  for  a  few  im- 
portant roads : 


THE    POSTAL    DEFICIT. 


51 


Number  of  stations. 

Railway. 

Total. 

Messenger  service 
performed  by — 

Railway. 

Govern- 
ment. 

Pennsylvania  railroad 

Louisville  and  Nashville  railroad. . 

Southern  Pacific  Company 

Chicago   and   Northwestern  rail- 
way  

1,454 
674 
700* 

761 

785 
445 
419 

570 
88 

669 
229 
281* 

191 

Mobile  and  Ohio  railway 

34 

Total 

3,711 

2,307 

1,404 

*  Approximate. 


From  the  foregoing  it  appears  that  the  roads 
named  perform  messenger  service  at  02  per  cent  of 
the  stations  that  they  serve.  They  are,  as  a  whole 
scarcely  typical  of  the  country  at  large  in  this  re- 
spect, because  in  the  aggregate  they  probably  serve 
a  larger  proportion  of  the  older  and  larger  cities  and 
other  settlements,  in  which  the  post-offices  and  busi- 
ness portions  are  more  apt  to  be  widely  separated 
from  the  railway  stations  than  in  newer  and  less  ex- 
tensive  settlements. 

The  expenses  incurred  in  performing  these  serv- 
ices cannot  be  mathematically  determined  in  many 
cases  because  they  are  covered  by  the  compensation 
paid  to  employes  who  also  have  other  duties.  Such 
compensation  must,  however,  be  enhanced  on  accounl 


\ 


52  THE    POSTAL    DEFICIT. 

of  this  work.  In  a  relatively  small  number  of  in- 
stances the  railway  companies  are  forced  to  hire  em- 
ployes to  perform  these  messenger  services  who  have 
no  other  duties,  or  to  contract  with  outsiders  for  their 
performance. 

The  annual  expenditures  of  the  Illinois  Central 
railroad,  in  accordance  with  such  contracts,  which 
provide  for  services  at  thirty-eight  towns,  aggregate, 
annually,  $3,864.  The  Southern  Pacific  Company 
expends  directly  for  this  purpose  $9,814.64  per 
annum,  and  estimates  that  the  services  of  its  em- 
ployes in  this  connection  cost  $57,115.  This  is 
for  services  at  419  stations,  including  72  terminals. 
The  expense  incurred  by  the  Union  Pacific  sys- 
tem for  transfers  at  Union  Pacific  Junction,  Chey- 
enne, and  Ogden  amounts  to  $12,600,  and  that  of 
the  depot  company  at  Kansas  City  to  $8,500  per 
annum.  There  are  some  very  curious  results  of  this 
system  taken  in  connection  with  the  method  of  deter- 
mining railway  compensation.  A  mail  route  on  the 
Delaware,  Lackawanna  and  Western  railroad  from 
Newark  to  Montclair,  New  Jersey,  is  6.08  miles  long, 
and  the  pay  from  the  Department  amounts  to 
$587.44  yearly.  Yet  the  railway  company,  in  addi- 
tion to  carrying  the  mail  each  way  several  times  per 
day,  actually  expends  $600  per  annum  for  messenger 
service,  $300  at  each  terminus.  Two  station  agents 
along  the  line  also  perform  messenger  service,  though 
without  special  compensation  therefor.  In  another 
case,  in  which  the  route  was  finally  discontinued  at 
the  request  of  the  carrier  which  was  unwilling  to 


THI>:    POSTAL    DEFICIT.  53 

continue  business  on  such  terms,  the  railway  ex- 
pended  $480  for  messenger  service  at  a  single  station, 
while  receiving  hut  £4-5.48  per  annum  for  the  entire 
route.  This  route  was  from  Clifton  to  Rosehank,  on 
Staten  Island,  and  the  excessive  expenditure  was  at 
the  last-named  point. 

Superintendent  Bradley  estimates,  roughly,  that 
the  cost  to  the  Department,  if  it  undertook  these 
services,  would  be  §500,000  per  annum,  though  <  Gen- 
eral Shallenberger  testifies  that  it  now  costs  the  De- 
partment about  §1,000,000  annually  to  handle  mail 
at  7.000  or  one-third  as  many  stations  as  those  in 
question.  The  offices  served  by  the  Department 
are,  however,  more  than  80  rods  from  the  railway 
stations. 

When  mail  was  carried  principally  in  stage- 
coaehes,  the  latter  were  required  to  prolong  their 
journeys  to  the  post-offices  at  terminals  without  re- 
gard to  the  distance  which  might  separate  them 
from  the  ordinary  stopping  places  for  passengers. 
This  custom,  too,  has  survived  the  conditions  out  of 
which  it  grew,  and  railways  are  now  compelled  to 
pel-form  with  difficulty  and  at  considerable  expense 
an  extra  service  which  was  simply  and  easily  per- 
formed by  the  stage-coaches.  The  following  is  from 
the  Postal  Laws  and  Regulations  : 

••  Every  railroad  company  is  required  to  take  the  mails  from 
and  deliver  them  into  all  terminal  post  offices,  whatever  may 
be  the  distance  between  the  station  and  post-office,  except  in 

cities  where   other   provision  for   such    service  is  made   by  the 
Department." 


54  THE    POSTAL    DEFICIT. 

There  is  one  difference  between  the  service  at 
terminals  and  that  at  intermediate  points,  viz.,  that 
the  distance  between  the  station  and  the  post-office 
is  added  to  the  length  of  the  route  when  this  service 
is  performed  and  the  carrier  receives  pay  at  the 
rsgular  rate  per  mile,  while  in  the  case  of  inter- 
mediate stations  there  is  no  compensation  whatever. 
This  service  at  terminals  is,  however,  a  cause  of  con- 
siderable loss  to  the  railways  which  are  forced  to 
perform  it,  and  the  regulation  is  a  source  of  relative 
injustice  as  between  these  companies  and  those  at 
whose  terminals  the  Department  provides  its  own 
service.  At  Denver  the  Union  Pacific  railway  ex- 
pends $1,920  per  annum  to  carry  mails  between  its 
station  and  the  post-office,  while  the  amount  added 
to  its  compensation  in  return  is  $215.70.  A  few 
years  ago,  before  certain  mails  were  diverted  to  other 
routes,  the  loss  was  considerably  greater,  the  com- 
pany expending  $3,900  and  receiving  but  $410  per 
annum. 

SPECIAL    STATION    SERVICES. 

Allusion  has  already  been  made  to  the  feet  that 
track  room  must  be  supplied  at  terminal  stations 
for  postal  cars  during  the  hours  that  they  are  used 
for  distributing  purposes  prior  to  the  departure  of 
the  trains  to  which  they  are  to  be  attached.  This  is 
not,  however,  the  sole  demand  which  the  postal  serv- 
ice makes  in  regard  to  station  facilities.  The  postal 
regulations  include  the  following  : 


THE    POSTAL    DEFICIT.  55 

"  Tlie  railroad  company,  at  stations  where  transfer  clerks  are 
employed,  will  provide  suitable  and  sufficient  rooms  for  hand- 
ling and  storing  the  mails,  and  without  specific  charge  there- 
for. These  rooms  will  be  lighted,  heated,  furnished,  supplied 
with  ice  water,  and  kept  in  order  by  the  railroad   company." 

Another  section  reads: 

_  "  When  a  train  departs  from  a  railroad  station  in  the  night- 
time, later  than  9  o'clock,  and  it  is  deemed  necessary  to  have 
the  mail  dispatched  by  such  train,  the  division  superintendent 
may  authorize  the  mail  messenger  or  carrier  to  take  the  mail 
to  the  railroad  station  at  such  time  as  will  best  serve  the  in- 
terests of  the  mail  service,  and  deliver  it  to  the  agent  or  other 
representative  of  the  railroad  company,  who  will  be  required 
to  keep  it  in  some  secure  place  until  the  train  arrives,  and  then 
see  that  it  is  properly  dispatched." 

Under  these  regulations  the  Chicago,  Milwaukee, 
and  Saint  Paul  railway  furnishes  the  Department 
with  a  separate  room  at  Saint  Paul,  which  is  thirty- 
seven  by  forty  feet  in  size;  two  at  Chicago,  twenty 
by  twenty-five  and  eight  by  ten,  respectively ;  one 
at  Minneapolis,  twenty-five  by  twenty-four:  and  one 
at  Milwaukee,  twelve  by  eighteen.  At  other  points 
the  mail  is  stored  in  the  baggage-room,  freight-room, 
or  in  the  office.  Railway  employes  load  the  mail, 
and.  in  case  there  is  no  postal  clerk  on  the  train,  they 
also  unload  it.  At  terminals  they  must  unload  it 
and  take  it  in  trucks  or  otherwise  to  the  wagons  or 
transfer  it  from  ear  to  ear.  as  may  be  necessary.  The 
Chicago  and  Northwestern  railway  employs  eight 
men  at  Chicago  who  devote  all  their  time  to  sorting, 
loading,  and  transferring  mail. 


< 


56  THE    POSTAL    DEFICIT. 


RECORDS     AND     REPORTS     REQUIRED. 

Section  728  of  the  Postal  Laws  and  Regulations 
reads  as  follows : 

"  Railway  companies  shall  keep  a  record  of  all  closed  pouches 
handled  by  their  employes,  and  any  irregularity  will  be  imme- 
diately reported  to  the  division  superintendent  of  Railway  Mail 
Service.  Specific  instructions  in  regard  to  the  character  of  the 
record  to  be  kept,  and  of  the  report  to  be  made,  will  be  issued 
through  the  office  of  the  General  Superintendent  of  Railway 
Mail  Service." 

The  stationery  and  blanks  necessary  to  carry  out 
the  foregoing  section  must  be  supplied  to  the  rail- 
ways. Railways  are  also  required  to  furnish  the 
blanks,  stationery,  etc.,  required  for  use  in  connec- 
tion with  the  weighings  which  constitute  the  basis 
on  which  railway  mail  pay  is  calculated. 

FREE    TRANSPORTATION    OF    PERSONS    AND    PROPERTY. 

The  railways  are  also  required  to  furnish  services 
in  the  transportation  of  mail  equipment  and  other 
postal  property  not  in  connection  with  any  regular 
mail  service  for  which  they  receive  compensation. 
This,  though  by  no  means  voluntary  on  their  part, 
must  be  deemed  free  service,  as  it  has  no  fixed  rela- 
tion, either  in  quantity  or  otherwise,  to  the  services 
for  which  they  are  paid,  and  is  in  no  way  repre- 
sented in  the  calculations  by  which  such  compensa- 
tion is  determined.  This  requirement  is  set  forth  in 
section  712  of  the  Regulations,  which  reads  as  fol- 
lows : 


THE    POSTAL    DEFICIT.  57 

"  Railroad  companies  are  required  to  convey  upon  any  train, 
without  specific  charge  therefor,  all  mail  bags,  post-ofiice 
blanks,  stationery,  supplies,  and  all  duly  accredited  agents  of 
the  Department  and  post-office  inspectors  upon  the  exhibition 
of  their  credentials." 

The  transportation  of  the  clerks  who  are  employed 
in  handling  mail  in  postal  cars  has  been  discussed 
under  this  head,  but  it  bv  no  means  includes  all  of 
the  transportation  of  persons  which  is  furnished  at 
the  del. uuid  of  the  Post-office  Department.  The 
aggregate  distance  traveled  by  officers  and  employes 
of  the  Railway  Mail  Service  during  the  year  ended 
June  30, 1898,  was,  approximately,  350,452,635  miles, 
of  which  337,217,407,  or  94.60  percent.,  was  by  postal 
clerks  in  the  performance  of  their  duties ;  the  bal- 
ance, equal  to  19,235,228  miles,  or  5.40  per  cent,  of 
the  total,  was  made  up  of  17,608,450  miles  traveled 
bv  clerks  who  were  "  dead-heading  "  and  of  the  mile- 
age  of  the  higher  officers  of  the  service. 

Post-office  inspectors  carry  photographic  commis- 
sions, in  accordance  with  the  terms  of  which  the  rail- 
ways are  obliged  to  carry  them  free.  These  commis- 
sions read  in  part  as  follows  : 

"  To  whom  it  is  concerned  : 

"The  bearer  hereof  is  hereby  designated  a  post-office  in- 
spector of  this  Department,  and  travels  by  my  directions  on 
this  business.  He  will  be  obeyed  and  respected  accordingly  by 
mail  contractors,  postmasters,  and  all  others  connected  with  the 
postal  service.  Railroads,  steamboats,  and  other  mail  contract- 
ors are  required  to  extend  the  facilities  of  free  travel  to  the 
holder  of  this  commission." 

The  miles  traveled  by  inspectors  during  Septem- 
ber, L898,  numbered  247,513,  which  was  at  the  rate  of 

5 


< 


58  THE    POSTAL    DEFICIT. 

2,970,156  miles  per  year.  The  superintendent  of  the 
free-delivery  system  estimates  that  the  holders  of 
commissions  calling  for  free  transportation  in  his 
branch  of  the  service  average  25,550  miles  per  annum. 
As  there  are  twenty  persons  who  hold  such  commis- 
sions, the  total  travel  must  approximate  511,000 
miles.  Congress  has  given  at  least  tacit  sanction  to 
the  understanding  that  the  railways  must  furnish 
free  transportation  to  the  employes  of  the  Department 
whenever  traveling  on  other  than  official  business. 
This  apparent  sanction  is  to  be  found  in  the  provis- 
ion which  required  the  Department  to  revoke  the 
order  which  prohibited  postal  clerks  from  living  off 
from  the  routes  to  which  they  were  assigned,  and 
forbade  them  to  accept  free  transportation  except  on 
the  routes  on  which  they  had  to  travel  for  official 
purposes.  Postal  clerks  who  work  in  only  one  di- 
rection, and  this  practice  is  not  uncommon  owing 
to  the  fact  that  the  volume  of  mail  in  different  direc- 
tions is  unequal,  are  returned  free  in  passenger  cars, 
while  in  other  cases  postal  clerks,  and  even  local 
postal  employes,  are  sent  to  meet  trains  in  the  same 
manner. 

RISK    ASSUMED    BY   RAILWAYS. 

The  railways  are  responsible  for  injuries  incurred 
by  employes  of  the  Post-office  Department,  and  the 
assumption  of  this  risk  is  properly  to  be  enumerated 
among  the  services  which  the  railways  perform,  or 
at  least  as  a  condition  which  is  material  in  any  ex- 
amination of  the  nature  of  those  services.     The  posi- 


THE    POSTAL    DEFICIT. 


59 


tion  of  the  postal  ear  is  usually  such  as  to  make  the 
danger  to  its  occupants,  in  case  of  collision,  greater 
than  that  of  any  other  persons  on  the  train,  except 
those  on  the  locomotive.     The  total  number  of  postal 

clerks  injured  in  railway  accidents  from  1875  to  Is!)!), 
inclusive,  was  2,520,  of  whom  82  were  killed,  while 
938  others  were  seriously  injured.  The  following 
statement  shows  the  results  of  railway  accidents  dur- 
ing the  last  five  years  : 


Year. 

Number  of 

clerks 
in  service. 

Number 
killed. 

Number 

seriously 
injured. 

Number 
slightly 

injured. 

1895 

7,045 
7,408 
7,573  . 
7,999 
8,388 

7 
5 
14 
7 
6 

50 
47 
33 
34 
50 

128 

1896 

1897   

1898 

1899 

65 

75 
146 
162 

The  amounts  actually  paid  by  the  railways  in 
damages  growing  out  of  such  injuries  as  are  shown 
in  the  foregoing  are  by  no  means  insignificant. 
During  the  first  half  of  the  year  L898  the  Southern 
Pacific  Railway  Company  paid  out  $3,750  for  this 
purpose,  and  an  officer  of  that  road  estimates  that 
th<'  yearly  average  is  live  or  six  thousand  dollars. 
'Hie  Atchison,  Topeka  and  Santa  Fe  railroad  has 
paid  an  average  of  $7,500  per  annum  for  the  lasl 
five  years,  while  during  a  single  year  the  claims  paid 
by  the  Southern  Railway  aggregated  $15,000,  after 
which  it  still  had  claims  pending  settlement  which 
altogether  amounted  to  $24,000  more. 


60  THE    POSTAL    DEFICIT. 


RAILWAY    SERVICES    SUMMARIZED. 

The  more  important  of  the  requirements  may  be 
recapitulated  as  follows : 

1.  Mail  must  go  on  the  fastest  train. 

2.  Mail  service  must  be  carried  on  any  train  that  the  Depart- 
ment selects. 

3.  Mail  trains  must  be  accorded  the  right  of  way  over  all 
other  trains. 

4.  No  mail  may  ever  be  left  behind. 

5.  Railways  must  invariably  supply  sufficient  car  space,  re- 
gardless of  the  suddenness  or  unusualness  of  the  demand. 

6.  Mail  cars  must  be  furnished  with  the  best  appliances  that 
science  and  art  can  afford. 

7.  Mail  cars  must  be  placed  in  the  stations  where  they  can 
be  easily  and  conveniently  approached. 

8.  Railway  employes  must  give  the  mail  their  earliest  atten- 
tion on  the  arrival  of  trains. 

9.  Mail  must  be  placed  in  trains  and  at  termini  and  in  certain 
other  cases  removed  from  trains  by  railway  employes. 

10.  Mail  must  be  called  for  and  delivered  by  the  railway 
wherever  the  post-offices  are  within  one-quarter  of  a  mile  of 
the  railway  station. 

11.  The  railway  must  assume  responsibility  for  accidents  to 
postal  employes. 

12.  Employes  of  the  Department  must  be  carried  free  of 
charge  in  passenger  coaches  when  traveling  on  official  business. 

13.  Appliances  for  the  receipt  of  pouches  while  trains  are  in 
motion  must  be  supplied  and  maintained  wherever  demanded 
by  the  Department. 

14.  Special  postal  cars  and  compartments  partitioned  off  from 
other  cars  must  be  supplied,  lighted,  heated,  and  otherwise 
maintained  and  provided  with  space  and  appliances  for  dis- 
tributing mail  in  transit  at  the  demand  of  the  Department. 

By  persistent  and  strenuous  insistence  upon  these 
requirements  the  Post-office  Department  has,  with 
the  cordial  co-operation  of  the  railways,  built  up  a 
system  of  railway  mail  distribution  and  transporta- 
tion that  is  magnificent  in  its  efficiency  and  marvel- 
ous in  the  perfection  of  its  adjustment  to  the  demands 


tup:  postal  deficit.  61 

of  the  public.  Tt  should  not  be  forgotten,  however, 
that  it  is  a  costly  service,  and  involves  methods  that 
arc  radically  different  from  those  followed  in  other 
forms  of  transportation.  Mail  is  not  and  cannot 
satisfactorily  he  handled  as  an  ordinary  commodity 
of  commerce,  and  the  service  performed  by  the  rail- 
ways is  not  comparable  with  those  usually  designated 
by  the  term  transportation.  This  fact  was  admi- 
rably expressed  by  Mr.  Kruttschnitt,  vice-president 
and  general  manager  of  the  Southern  Pacific  Com- 
pany, in  the  paragraph  quoted  below: 


(« 


We  cannot  handle  the  mail  as  a  commodity.  The  Depart- 
ment, for  the  benefit  of  the  public,  prescribes  the  most  expen- 
sive manner  of  handling  it.  and  the  public  is  given  the  very 
best  of  service.  With  freight  we  can  make  our  own  rules.  We 
can  load  cans  to  the  limit  of  their  capacity,  and  we  can  hold 
them  back  a  little  and  put  them  in  trains  where  the  locomo- 
tives are  worked  up  to  the  limit  of  their  capacity.  Indeed,  we 
have  been  studying  nothing  else  for  the  past  three  years  but 
how  to  operate  our  roads  with  the  greatest  economy,  and  we 
have  succeeded,  in  the  face  of  the  general  fall  in  rates,  in  keep- 
ing the  properties  going  through  economical  methods  of  opera- 
tion. Day  after  day  the  public  and  the  Department  represent- 
ing the  public  is  more  and  more  exacting,  and  the  expense  to 
us  of  conducting  that  service  is  increasing  instead  of  diminish- 
ing.  There  is  no  way  by  which  we  can  reduce  the  cost  of  the 
service,  because  the  facilities  are  continuallv  being  increased." 


RAILWAY    COM  PENSATION. 

Having  ascertained  what  the  railways  do  for  the 
public  in  connection  with  the  postal  service,  it  is  now 
desirable  t<>  sec  how  much  and  in  what  manner  they 
are  paid  for  those  services. 

The  actual  amount  received  bv  all  mail  carrying 
railways  for  the  services  performed  by  them  during 
the  fiscal  year  ended  June  30, 1899,  was  $35,759,343.93, 
distributed  as  follows: 


62  THE   POSTAL   DEFICIT. 

Pay  based  on  weight  and  distance $31,621,486.12 

Pay  based  on  mileage  of  full  postal  cars 3,960,953.86 

Pay  for  expediting  certain  mails 176,903.95 

Total $35,759,343.93 

That  portion  of  railway  mail  pay  which  has  been 
referred  to  in  the  foregoing  as  being  based  on  weight 
and  distance  is  in  accordance  with  a  law  which  was 
passed  in  1873,  as  amended  by  laws  providing  for 
successive  reductions  of  ten  and  five  per  cent  of  ex- 
isting rates  which  became  effective  respectively  in 
1876  and  in  1878.  This  law  provides  different  rates 
per  mile  of  line  for  different  quantities  of  mail,  so 
that  the  rate  per  unit  of  weight  decreases  as  the 
amount  carried  increases.  The  following  statement 
shows  the  rates  per  mile  of  route  that  are  paid  at 
present  for  different  weights  of  mail  and  the  equiva- 
lent rates  per  ton  per  mile  : 


Average  weight  of  mails  per  day  carried 
over  whole  length  of  route. 


200  pounds 

500       " 

1,000       "       

1,500       "      

2,000       "      

3,500       " 

5,000       "       

Every  additional  2,000  pounds 


Under  act  of  March 
3, 1873,  as  amended 
by  acts  of  July  12, 
1876,  and  June  17, 
1878. 


Rate    per 

Rate  per 

mile  per 

ton  per 

annum. 

mile. 

Cents. 

$42.75 

117.123 

64.12 

70.268 

85.50 

46.849 

106.87 

39.039 

128.25 

35.137 

149.62 

23.424 

171.00 

18.740 

21.37  , 

5.855 

THE    POSTAL    DEFICIT.  63 

It  will  be  observed  that  the  effect  of  the  scale  of 
rates  shown  in  the  foregoing  is  that  as  the  amount 
of  mail  shipped  over  any  route  increases  the  average 
rate  per  unit  of  quantity  decreases.  Proportionate 
increases  are  accorded  for  quantities  between  those 
shown  in  the  table,  but  no  payment  is  made  for  an 
amount  which  is  insufficient  to  require  the  payment 
of  one  dollar  at  the  regular  rate.*  Roads  which  were 
assisted  by  grants  of  public  land  are  paid- only  eighty 
per  cent,  of  the  foregoing.  The  railways  are  divided 
into  routes  without  regard  to  their  corporate  organ- 
ization, and  tli is  permits  the  Government  to  secure 
cheaper  service  by  availing  itself  of  the  shortest 
routes  between  the  points  served,  and  also  by  concen- 
trating mail  upon  certain  lines.  There  are  about 
2,017  of  these  routes  in  the  country,  and  of  these 
there  were  208  routes  on  which  the  rate  of  payment 
has  been  fixed,  by  special  agreement,  at  less  than 
$42.75  per  mile,  the  lowest  figure  provided  in  the 
law.  In  order  to  illustrate  further  the  operation  of 
the  law,  the  following  table,  which  has  been  arrange.  1 
from  data  collected  and  presented  to  the  Joint  Postal 
Commission  bv  Professor  Henrv  ( \  Adams,  is  intro- 
duced  : 


64 


THE   POSTAL   DEFICIT. 


o3 


03 


03 


O 

— 

03 
O 

o3 

H 


02 
CU 


O 


3jD 


O 


G    03 

CU   o 
Cu 


3 
O 


c"    o3 

go 
a;  o 


cu  a) 


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THE    POSTAL    DEFICIT. 


65 


The  statement  shows  what  a  large  proportion  of  the 
aggregate  mail  traffic  given  to  railways  is  carried  at 
the  lower  rates.  It  shows  that  nineteen  routes,  or  less 
than  one  per  cent  of  the  total  number,  perform  20.73 
per  cent  of  the  total  transportation,  measured  in  tons 
carried  one  mile,  though  they  receive  but  10.27  per 
cent,  of  the  total  compensation.  On  the  other  hand, 
1,286  routes,  or  53.58  per  cent  of  the  total  number 
and  22.08  per  cent  of  the  total  mileage,  perform  less 
than  one  per  cent  of  the  total  transportation,  though 
they  receive  6.49  per  cent  of  the  aggregate  pay.  The 
latter  class  includes  all  of  the  routes  which  receive 
more  than  sixty  cents  per  ton  per  mile.  The  routes 
that  receive  from  five  to  ten  cents  per  ton  per  mile 
perform  62.06  percent,  of  the  total  transportation,  for 
which  they  receive  37.42  per  cent,  of  the  total  pay. 

The  present  allowance  of  pay  for  full  postal  gars 
is  based  on  the  length  of  the  cars,  and  consists  of  a 
certain  rate  multiplied  into  the  length  of  the  route. 
In  order  to  earn  these  rates,  the  car  must  pass  over 
the  whole  length  of  the  route  twice  daily.  The  fol- 
lowing  statement  shows  the  rates  provided  and  some 
of  their  results  : 


Length   of  car   in 
feet. 


40 
4-") 
50 
55  or  60 


Rate  per  mile  run, 
in  cents. 


3.42 

4.11 
5.48 

6.85 


66  THE   POSTAL    DEFICIT. 

No  pay  is  allowed  for  compartment  cars,  though 
the  facilities  furnished  are  similar  in  every  respect 
except  in  quantity  to  those  afforded  by  full  postal 
cars.  The  primary  observation  in  regard  to  this 
portion  of  railway  pay  is  that  it  cannot  properly  be 
considered  apart  from  that  portion  which  is  based 
upon  weighc  and  distance.  A  historical  study  of 
the  subject  will  show  that  postal-car  pay  was  pro- 
vided in  order  to  relieve  the  serious  discontent  of 
the  trunk-line  railways  over  the  rates  of  pay  under 
the  law  of  1873,  and  at  the  behest  of  the  officers  of 
the  Department  who  feared  a  reduction  in  the 
efficiency  of  the  service.  It  is,  therefore,  to  be  con- 
sidered as  a  part  of  the  general  payment  and  as 
special  in  form  only.  It  is  accorded  to  the  lines 
which  receive  the  lowest  rates  and  furnish  the  pub- 
lic with  the  most  complete  facilities.  This  will  be 
evident  from  the  table  below,  in  which  postal-car 
pay  is  classified  according  to  the  rates  received  on 
the  same  routes  under  the  weight  and  distance  scale 
of  rates : 


THE    POSTAL    DEFICIT. 


67 


Hate  per  ton  per  mile. 


00  cents  and  over 
40  to  60  cents  . . . 
40      "     ... 


30 
20 
15 

12 

10 

0 

8 

7 
0 
5 


i  i 


30  « 

20  « 

15  ■ 

12  ' 

10  ' 

9  " 

8  ' 

7  ' 

6  « 

Total 


Postal  car  pay. 


Amount. 


None. 

$2,435.50 

17,605.00 

50,315.50 

217,0:51.53 

430,700.05 

403,708.18 

421,548.52 

1,011,830.89 

891,251.45 

73,642.50 

None. 


3,580,738.12 


Per  cent 
of  total. 


0.00 
.07 
.49 

1.41 

0.08 
12.03 
12.95 
11.77 
28.20 
24.89 

2.05 


100.00 


That  portion  of  railway  mail  pay  which  has  been 
designated  as  being  allowed  in  return  for  especially 
expedited  service  is  allotted  to  certain  lines  which 
carry  mail  between  the  cities  of  New  York  and  New 
Orleans,  and  between  Kansas  City  and  Newton, 
Kansas.  It  is  probably  allowed  in  view  of  the  belief 
that  the  regions  traversed  by  these  routes  are  too 
sparsely  settled  and  the  volume  of  mail  forwarded 
over  them  too  small  to  warrant  service  of  the  quality 
that  is  desired  by  the  Department  and  believed  to 
be  accessary  on  account  of  tbe-eharacter  of  the  mails 
handled  on  them.  The  entire  amoUn4  of  this  pay, 
which  is  usually  denominated  "special-facility  pay ' 
constitutes  less  than  one-half  of  one  per  cent  of  the 


68  THE   POSTAL   DEFICIT. 

aggregate  mail  pay,  and  it  is  therefore  too  insignifi- 
cant to  warrant  extended  treatment. 

It  is  evident  from  the  foregoing  that  there  is  no 
fixed  or  definite  relation  between  postal  receipts  and 
the  amounts  paid  for  railway  mail  services.  The 
practical  application  of  the  postal  principle  by  the 
United  States  Government  has  resulted  in  a  system 
of  postal  charges  in  which  distance  is  absolutely 
ignored.  Congress  could  not  fail  to  recognize  the 
impropriety  of  attempting  to  secure  railway  services 
upon  similar  terms,  and  therefore  adopted  the  plan 
contained  in  the  law  of  1873.  This  plan  recognizes 
both  weight  and  distance  as  factors,  and  also  pro- 
vides an  allowance  that  recognizes  space  in  the  form 
of  postal-car  pay.  The  relation  between  these  al- 
lowances is  so  disproportionate  to  the  extent  in  which 
the  different  elements  enter  into  the  services  per- 
formed that  the  recognition  can  only  be  regarded  as 
a  formal  concession  of  the  principle,  and  is  impor- 
tant in  that  aspect  only.  An  adequate  allowance  for 
the  space  occupied  would  certainly  include  compen- 
sation for  compartment  cars,  and  the  total  payment 
under  it  would  probably  encroach  materially  upon 
the  sum  now  paid  on  the  weight  basis. 

Among  the  noteworthy  results  of  the  system  in 
vogue  is  the  fact  that  the  railways  frequently  fur- 
nish postal  cars  for  which  they  do  not  receive  postal- 
car  pay.  It  is  in  evidence  that  the  Chicago,  Mil- 
waukee, and  St.  Paul  railway  ran  a  full  line  of  such 
cars  over  a  route  230  miles  in  length  for  several  years 
without  receiving  any  payment.     In  fact,  it  appears 


THE    POSTAL    DEFICIT.  G9 

to  have  come  to  be  an  understanding  among  railway 

officers  that  they  must  furnish  all  facilities  that  are 
called  for  and  accept  whatever  compensation  the 
Department  can  and  will  allow. 

WEIGHING. 

As  weight  is  the  basis  of  the  greater  portion  of 
railway  mail  pay, it  follows  that  means  must  be  pro- 
vided for  ascertaining,  at  regular  intervals,  the 
weights  that  are  carried  over  the  several  routes. 
The  law  on  the  subject  reads  as  follows: 

"  .  .  .  '.  the  average  weight  to  be  ascertained  in  every 
case,  by  the  actual  weighing  of  the  mails  for  such  a  number  of 
successive  working  days,  not  less  than  thirty,  at  such  times 
after  June  thirtieth,  eighteen  hundred  and  seventy-three,  and 
not  less  frequently  than  once  in  every  four  years,  and  the  re- 
sult to  be  stated  and  verified  in  such  form  and  manner  as  the 
Postmaster  General  may  direct." 

The  method  adopted  by  the  Department  in  the 
execution  of  the  foregoing  provision  of  law  is  to 
divide  the  country  into  four  great  weighing  districts, 
and  to  conduct  a  weighing  in  each  of  the--'  districts 
once  in  four  years.  The  districts  are  taken  in  suc- 
cession, one  of  them  being  weighed  each  year,  and 
never  more  than  one  in  the  same  year. 

As  the  basis  of  payment,  established  by  the  statute, 
is  pounds  carried  the  whole  length  of  the  route, 
while  in  actual  practice  mail  is  put  off  and  received 
at  every  intermediate  station  at  which  trains  stop,  and 
by  means  of  cranes  and  catchers  at  many  stations 
where  they  do  not  stop,  it  i<  necessary  to  reduce  all 
mail  to  its  equivalent  in  pounds  carried  over  the 


70 


10 


0 


o 


)     0'^ 


THE   POSTAL   DEFICIT,     kr    J   feP 


whole  route.  Thus,  if  the  length  of  a  r&ute  is  one 
hundred  miles  and  a  particular  lot  of  mail,  weighing 
one  thousand  pounds,  is  carried  between  two  inter- 
mediate points  which  are  twenty-five  miles  apart,  it 
appears  in  the  result  as  two  hundred  and  fifty  pounds 
carried  one  hundred  miles.  The  weight  which  is 
the  basis  of  payment  is  thus  made  up  of  a  large 
number  of  items,  and  it  is  wholly  incorrect  to  con- 
sider it  as  a  single  shipment  forwarded  over  a  dis- 
tance equal  to  the  length  of  the  route.  The  follow- 
ing weighing  sheet  for  an  assumed  route  has  been 
copied  from  Professor  Adams'  report  to  the  Joint 
Postal  Commission  : 


Distance 
between 
stations. 

Weight  of  mail. 

Pounds 
carried 
between 
stations. 

Pound- 
mileage 
of  mail. 

Average 
weight  car- 
ried  over 
whole  route. 

Stations. 

Pounds 
taken  on. 

Pounds 
put  off. 

A 

Miles. 

5,000 
7,000 
3,000 

4,000 
5,000 
6,000 

5,000 
8,000 
6,000 

50,000 

96,000 

168,000 

B 

10 
12 

28 

C 

D 

Totals  and 

50 

15,000 

15,000 

314,000 

6,280 

The  foregoing  relates  to  a  supposititious  route  fifty 
miles  in  length,  with  two  stations  in  addition  to  its 
termini.  The  train  arriving  at  station  B  brings 
5,000  pounds  of  mail,  4,000  of  which  is  put  off.  To 
the  difference  is  added  7,000  pounds  received  at  B, 
and  the  sum  is  multiplied  by  the  distance  between 
B  and  C,  giving  a  pound-mileage  of  96,000.  This, 
added  to  similar  accounts  obtained  between  other 


i' 


THE    POSTAL    DEFICIT.  71 

pairs  of  stations,  gives  the  total  pound-mileage  of 
314,000,  which   being  divided  by  50,  the  Length  of 

the  route  in  miles,  the  result  is  6,280,  the  equivalent 
of  the  total  movement  in  pounds  carried  the  entire 
length  of  the  route.  A  weighing  sheet  similar  to 
this  could  be  made  for  each  mail  train  traversing  all 
or  a  part  of  each  route,  and  the  sum  of  the  amounts 
shown  in  the  lower  left-hand  corner  would  indicate 
the  total  weight  on  which  the  payment  should  be 
calculated.  No  one  who  bears  this  method  of  deter- 
mining the  weight  basis  of  payment  in  mind  will 
fall  into  the  error  of  assuming  that  payments  are  for 
single  and  continuous  shipments. 

The  weighing  is  done  under  the  supervision  of 
officers  of  the  Railway  Mail  Service  and  by  persons 
appointed  by  the  Postmaster  General.  It  usually 
extends  throughout  a  period  of  about  thirty  days. 

A  good  deal  has  been  said,  chiefly  by  means  of 
covert  intimations  and  innuendo,  in  regard  to  fraud- 
ulent increases  of  mail  during  the  weighing  periods 
for  the  purpose  of  securing  to  the  railways  increased 
and  excessive  compensation.  The  subject  has  re- 
ceived careful  examination,  both  on  the  part  of  the 
Department  and  of  the  Joint  Postal  Commission,  and 
up  to  the  present  time  the  most  searching  investiga- 
tions have  brought  to  light  but  two  attempts  of  this 
kind,  both  of  which  were  promptly  detected.  One 
of  these  attempts  involved  a  weight  of  200  pounds 
on  a  railway  only  37  miles  long,  and  the  other  wasof 
only  slightly  greater  importance.  The  unanimous 
testimony  of  the   officers  of  the  Post-office  Depart- 


72  THE   POSTAL   DEFICIT. 

merit,  including  those  of  the  P*ailway  Mail  Service, 
and  of  all  who  have  studied  the  methods  in  use,  is 
that  it  is  quite  impossible  to  pad  the  mails  during  the 
weighing  period  without  the  facts  being  immediately 
detected  by  the  Department.  The  following  is  from 
the  testimony  of  Mr.  0.  L.  Teachout,  now  a  railway 
officer,  but  for  many  years  Superintendent  of  the 
Eleventh  Division  of  the  Railway  Mail  Service : 

"I  had  charge— full  charge— of  the  weighing  in  1894,  as  su- 
perintendent of  the  eleventh  division.  I  had  virtual  charge  of 
the  weighing  in  1890,  being  assistant  superintendent  of  the  di- 
vision, and  I  never,  in  all  the  experience  I  have  had,  saw  but 
two  suspicious  cases. 

"Q.  (By  Mr.  Moody.)  Do  you  think  that  there  is  any  danger 
of  fraud  in  the  weighings  where  you  have  honest  Government 
officials,  honest  superintendents,  and  honest  clerks? 

"A.  I  don't  think  there  is  any  particle  of  danger.  .  .  .  . 
I  have  been  in  the  service  as  postal  clerk  and  weighed  mail,  f 
know  that  when  a  clerk  is  on  the  road  he  notices  anything  out 
of  the  ordinary.  You  cannot  send  500  pounds  of  mail  of  any 
peculiar  kind  over  any  ordinary  line  without  the  postal  clerk 
knowing  about  it." 

The  investigation  of  this  subject  resulted,  how- 
ever, in  bringing  into  prominence  the  very  singular 
fact  that  while  any  attempt  on  the  part  of  the  rail- 
ways to  increase  the  volume  of  mail  during  the 
weighing  period  is  universally  condemned,  there  are 
numerous  officers  of  the  Government  who  habitu- 
ally withhold  mail  during  weighings,  and  that  this 
practice  has  the  sanction  of  the  Department.  Of 
course,  the  consequence  of  such  withholding  of  mail 
is  to  reduce  the  railway's  compensation  during  the 
succeeding  four  years  below  the  figure  which  would 
have  been  fixed  had  the  mail  been  permitted  to  go 
forward   in   its  customarv  volume.     Yet  while   an 


THE    POSTAL    DEFICIT.  73 

effort  to  increase  the  volume  during  the  weighing 
has  been  made  an  offense  punishable  by  the  Federal 
courts,  the  effort  to  decrease  it  is  considered  as  a  com- 
mendable act,  if  not,  indeed,  one  indicated  as  a  duty. 

If  the  facts  really  indicate,  as  they  apparently  do, 
a  principle  upon  which  the  Post-office  Department 
and  manv  other  branches  of  the  Government  habit- 
ually  act,  there  must  be  an  enormous  weight  of 
mail  which  is  never  permitted  to  be  represented  in 
the  weighings.  Former  Third  Assistant  Postmaster 
General  Hazen  has  said  that  during  his  term  of 
office  it  was  the  practice  of  the  Treasury  Department 
to  ship  roller-top  desks,  carpets,  etc.,  as  mail  matter, 
and  that  it  was  customary  for  the  Geological  Survey 
to  ship  tents,  valuable  instruments,  and  other  para- 
phernalia in  the  same  manner.  In  at  least  one  in- 
stance, alluded  to  by  Mr.  Loud,  the  Government 
brought  an  entire  train-load  of  coin,  valued  at 
$20,000,000,  across  the  continent  as  registered  mail. 
Postal  supplies  are  also  believed  to  be  withheld  at 
weighing  periods,  though  they  move  in  large  vol- 
ume at  all  other  times. 

There  are  other  reasons  why  the  results  of  the 
weighings  do  not  constitute  a  fair  average  of  the 
daily  movement  throughout  the  year.  It  is  a  matter 
of  general  knowledge  that  mails  are  much  heavier 
during  the  holiday  season  than  at  any  other  time, 
yet  weighings  are  never  held  'then.  Business 
houses  usually  -end  their  catalogues  in  the  fall,  and 
in  fact  all  mail  is  heavier  (hiring  the  fall  and  win- 
ter seasons  than  when  the  weighings  are  taken. 

6 


74  THE    POSTAL    DEFICIT. 

The  facts  that  have  been  mentioned  are  insignifi- 
cant, as  causes  of  the  disparity  between  mail  traffic 
and  the  assumed  mail  movement  that  is  made  the 
basis  of  mail  pay,  when  compared  with  the  fact  that 
the  weighings  are  held  but  once  in  four  years.  The 
statement  of  the  latter  fact  is  all  that  is  necessary  to 
convince  any  one  who  is  at  all  familiar  with  the  de- 
velopment  of  postal  business  that  the  railways  must 
always  carry  more  mail  than  they  are  paid  for  car- 
rying. Especially  is  this  true  in  regions  where 
population  is  rapidly  developing  or  where  many 
new  industries  of  the  kind  which  make  extensive 
use  of  the  mails  are  being  inaugurated.  A  recent 
example  of  this  occurred  on  the  Denver  and  Rio 
Grande  railroad,  which  for  the  four  years  that 
ended  with  June  30,  1898,  was  paid  on  the  basis  of 
the  weights  taken  in  April  and  May,  1894,  when  the 
State  of  Colorado  and  the  country  were  suffering  from 
serious  financial  depression.  Soon  thereafter  the  great 
Cripple  Creek  gold  region  was  opened,  populated, 
and  developed  to  the  highest  degree  of  activity.  In 
two  years  from  the  time  of  weighing  the  district  had 
an  estimated  population  of  35,000,  and  the  mails  to 
and  from  the  district  were  carried  by  the  Denver 
and  Rio  Grande  and  its  connection,  the  Florence 
and  Cripple  Creek  railroad,  without  the  former  re- 
ceiving any  additional  compensation  until  July  1, 
1898.  Under  normal  circumstances  it  is  probable 
that  the  increase  of  mail  for  a  given  quadrennial 
period  would  be  about  equally  divided  among  each 
of  the  years.     The  reader  can  easily  see,  from  the 


THE    POSTAL    DEFICIT. 


I  0 


following  statement,  how  much  mail  must  be  car- 
ried annually  that  is  not  paid  for  if  this  assumption 
is  even  approximately  correct  : 


Ton-mileage  of  all  routes. 

Weighing. 

Latest 
weighing. 

Next 
preceding 

weighing. 

Difference. 

Amount. 

Annual 
average. 

First 

73,227,667 
90,622,588 
47,620,441 
61,243,321 

66,819,535 
70,379,429 

42,196,164 
46,626,693 

6,408,132 
20,243,159 

5.424,277 
14,616,628 

1,602,033 

5.060,790 
1,356,069 
3,654,157 

Second 

Third 

Fourth 

It*  the  increases  in  the  foregoing  districts  are  dis- 
tributed  equally  among  the  years  separating  the 
respective  weighings  the  average  amount  carried 
by  the  railways,  but  not  paid  for,  must  have  been 
11,073,049  ton-miles  per  year.  At  the  average  rate 
of  pay  prevailing  in  the  United  States  the  pay 
for  this  amount  of  mail  transportation  would  be 
1 1 ,466,952. 

DECLIXK    IX    RATES    FOB    RAILWAY    MAIL    SERVICE. 

The  law  under  which  the  railways  are  paid  for 
carrying  mail,  as  has  been  observed,  was  so  framed 
that  as  mail  increases  the  rate  per  unit  of  weight  de- 
crease 3.  Tin-  extent  of  the  downward  movemenl 
that  was  insured  by  those  who  formulated  tin*  Dres- 
ent  law  will  he  indicated  by  a  few  examples.  The 
following  table  was  compiled  from  data  in  Professor 


76  THE    POSTAL   DEFICIT. 

Adams'  report.  In  a  later  portion  of  this  paper  at- 
tention will  be  called  to  certain  methods  adopted 
by  Professor  Adams  which  have  resulted  in  making 
the  average  rates  obtained  by  him  considerably 
higher  than  those  actually  paid  by  the  Government. 
The  table  will,  however,  fairly  serve  the  present  pur- 
pose of  showing  that  there  has  been  a  substantial  de- 
cline in  mail  rates.  It  is  to  be  observed  also  that 
Professor  Adams'  methods  do  not  result  in  an  over- 
statement of  this  decline  for  separate  groups.  The 
groups  shown  are  those  adopted  for  the  classification 
of  railway  statistics  by  Professor  Adams,  as  statisti- 
cian to  the  Interstate  Commerce  Commission,  and  are 
roughly  described  as  follows  : 

Group  I.  Maine,  New  Hampshire,  Vermont,  Massachusetts, 
Rhode  Island,  and  Connecticut. 

Group  II.  Delaware  and  Maryland,  exclusive  of  that  portion 
of  New  York  and  Pennsylvania  lying  west  of  a  line  drawn  from 
Buffalo  to  Pittsburg  via  Salamanca  and  inclusive  of  that  portion 
of  West  Virginia  lying  north  of  a  line  drawn  from  Parkersburg 
east  to  the  boundary  of  Maryland. 

Group  III.  This  group  embraces  the  States  of  Ohio,  Indiana, 
and  the  southern  peninsula  of  Michigan  ;  also  that  portion  of 
the  States  of  New  York  and  Pennsylvania  lying  west  of  a  line 
drawn  from  Buffalo  to  Pittsburg  via  Salamanca. 

Group  IV.  This  group  embraces  the  States  of  Virginia,  North 
Carolina,  South  Carolina,  and  that  portion  of  the  State  of  West 
Virginia  lying  south  of  a  line  drawn  east  from  Parkersburg  to 
the  boundary  of  Maryland. 

Group  V.  This  group  embraces  the  States  of  Kentucky,  Ten- 
nessee, Mississippi,  Alabama.  Georgia,  Florida,  and  that  por- 
tion of  Louisiana  east  of  the  Mississippi  river. 

Group  VI.  This  group  embraces  the  States  of  Illinois,  Wis- 
consin, Minnesota,  the  northern  peninsula  of  the  State  of  Michi- 
gan, and  that  portion  of  the  States  of  North  Dakota  and  South 
Dakota  and  Missouri  lying  east  of  the  Missouri  river. 

Group  VII.  This  group  embraces  the  States  of  Montana, 
Wyoming,  Nebraska,  that  portion  of  North  Dakota  and  South 
Dakota  lying  west  of  the  Missouri  river,  and  that  portion  of  the 
State  of  Colorado  lying  north  of  a  line  drawn  east  and  west 
through  Denver. 


THE    POSTAL    DEFICIT. 


77 


55 


a 


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32 

as. 

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ri  ec  9)1 — r  r.  SO  —  09  '_ 


M  CO  3>  t-  5  CO  ?i  as  3  3  Mi-~~ 
•f  r-  30  *  ~  r-  o  o  a  »  50  -  ^-  t 
v~  m  « '  « '  «n  ~*  r*  3  x  i-^  t^  t-^  t^  CO  !0  CO  '•  -r-r -r  r;  W  M  S  CM  N 

M;iMM^jij)5<r"r"rHr'rtr<nr-'r-rHHl"r*HHr"Pl 


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r-  t-  i-  i-  i-  t-  |-  |-  t-  r-    8     /     i     r     i     r.    ,     l.    r_   X   33 

»  Qc  x.  x  x   c  a    o  a    o  oo  a    i    /-,»»»  > >  a    /    e  ot   «   x 


n  r.  r    3    1 
X    /    r.  to  X) 


78  THE   POSTAL   DEFICIT. 

Group  VIII.  This  group  embraces  the  States  of  Kansas, 
Arkansas,  that  portion  of  the  State  of  Missouri  lying  south  of 
the  Missouri  river,  that  portion  of  the  State  of  Colorado  lying 
south  of  a  line  drawn  east  and  west  through  Denver,  and  the 
Territories  of  Oklahoma,  Indian  Territory,  and  that  portion  of 
New  Mexico  lying  northeast  of  Santa  Fe. 

Group  IX.  This  group  embraces  the  State  of  Louisiana,  ex- 
clusive of  the  portion  lying  east  of  the  Mississippi  river,  the 
State  of  Texas,  exclusive  of  that  portion  lying  west  of  Oklaho- 
ma, and  the  portion  of  New  Mexico  lying  southeast  of  Santa  Fe. 

Group  X.  This  group  embraces  the  States  of  California,  Ne- 
vada, Oregon,  Idaho,  AVashington,  and  the  Territories  of  Utah, 
Arizona,  and  that  portion  of  the  Territory  of  New  Mexico  lying 
southwest  of  Santa  Fe. 

From  the  foregoing  it  appears  that  the  average 
rate  per  ton  per  mile  paid  to  the  railways  declined 
in  twenty-five  years  throughout  the  United  States 
from  26.420  to  12.567  cents,  or  52.43  per  cent.  In 
the  first  group  the  decline  amounted,  from  1870  to 
1898,  to  67.80  per  cent. 

The  decline  in  the  rate  per  ton  per  mile  is  con- 
stantly being  retarded  by  the  extension  of  the  mail 
service  into  sparsely  settled  regions  and  over  routes 
on  which  the  movement  is  light  in  volume,  and  the 
rate  in  consequence  relatively  high.  The  utiliza- 
tion of  the  railways  commenced  with  those  having 
the  greatest  volume  and  has  extended  gradually  to 
those  serving  the  more  thinly  populated  portions  of 
the  country. 

In  1873  the  postal  service  made  use  of  but  five- 
sevenths  of  the  railway  mileage  of  the  country;  at 
the  present  time  it  utilizes  nearly  nine-tenths.  It 
follows  from  the  fact  just  mentioned  that  the  real 
reduction  can  be  discovered  only  by  an  examination 
of  the  results  on  particular  routes. 

The  following  statement  shows  such  changes : 


THE    POSTAL    DEFICIT. 


'9 


HATES  PBB  TON  PKR  MILE  IN  CENTS. 

(Not  including  postal-car  pay.) 


Between — 


Concord  and  White  River  Junction. 

Boston  and  Albany 

New  York  and  Buffalo 

Canandaigna  and  Tonawanda 

New  York  and  Philadelphia 

Weverton  and  Hagerstown 

Atlanta  and  Westpoint 

Nashville  and  Hickman 

Glasgow  Junction  and  Glasgow 

Dayton  and  Toledo 

Columbus  and  Pittsburg   

Peoria  and  Rock  Island 

Milwaukee  and  La  Crosse 

Mankato  and  Wells 

Hannibal  and  Sedalia 

Kansas  City  and  Denver 

Topeka  and  Kansas  City 

Union  Pacific  Transfer  and  Ogden. 

Salt  Lake  City  and  Stockton 

San  Francisco  and  Ogden 

Grafton  and  Parkereburg 

Columbia  and  Greenville 

Cincinnati  and  Chattanooga 

Chicago  and  Milwaukee 

Chicago  and  Burlington 

Chicago  and  Davenport 

St.  Paul  and  Missoula 

Dubuque  and  Sioux  City 

St.  Louis  and  Atchison 

St.  Louis  and   Kansas  City 

Little  Rock  and  Arkansas  City. . . . 

Houston  and  Orange 

Valley  and  Stromburg 

Columbus  and  Norfolk 

Marion  and  Chamberlain 

Flandreau  and  Sioux  Falls 


Year-. 


1879,1880, 
1881,  or 

1882. 


18.8 

8.0 

6.6 

118.0 

6.4 

74.0 

18.3 

46.7 

93.9 

32.0 

7.3 

63.8 

11.5 

26  M) 

27.0 

16  8 

10.8 

8.0 

266.0 

8.6 

8.4 

52.3 

29.6 

19.5 

12.4 

12.5 

8.8 

28.0 

12.0 

35.6 

74.8 

35.5 

74.1 

104.5 

71.2 

47.9 


1894.  1895, 
1896,  and 

1897. 


10.2 
6.4 
6.0 

70.0 
5.8 

54.0 
8.1 

19.6 


58 

9 

6 
41 

6 
56 
20 
11.0 

7.6 

6.8 
156. 0 


-  o 


39.7 

9.4 

7.9 

b.o 

8.3 

i .  i 

10.4 

6.4 

10.4 

41.2 

12.0 

56.5 

43.1 

42. 1 


80  THE   POSTAL   DEFICIT. 

The  least  reduction  for  any  route  shown  in  the 
foregoing  is  9.09  per  cent.  There  are  many  showing 
over  50  per  cent,  decline,  and  the  greatest  amounted 
to  78.15  per  cent.  The  illustrations  were  taken  at 
random,  the  selections  being  made  by  an  officer  of 
the  Post-office  Department,  According  to  the  testi- 
mony of  Mr.  Erastus  Young,  general  auditor  of  the 
Union  Pacific  system,  the  rate  paid  that  company  for 
carrying  mail  between  Cheyenne  and  Denver  de- 
clined, from  1880  to  1898,  from  62.5  cents  per  ton  per 
mile  to  13  cents,  or  79.20  per  cent.  It  is  possible  to 
compare  the  reductions  in  mail  rates  with  those  in 
the  charges  for  other  services  which  are  rendered  by 
the  railways.  Such  comparisons  have  already  been 
given  for  the  United  States  as  a  whole.  The  follow- 
ing table  shows  comparisons  between  the  rates  ap- 
plied to  mail,  passenger,  and  freight  traffic  respect- 
ively during  the  earliest  and  latest  years  from  1890 
to  1898  in  which  the  mail  was  weighed : 


THE    TO.STAL    DEFICIT. 


M 


Year. 

Rate  pe 

>r  mile  in  cents. 

Percent  of  decline. 

Territory  cov- 
ered. 

Q 

s 

— 

— M 

"5 

as  sengers 

per  pus- 
senger. 

reight  per 

ton. 

'3 

issengers. 

+3 

'3 

§ 

a, 

fe 

£ 

'- 

£ 

United  States. 

1890 

14.968 

2.167 

0.941 

1898 

12.567 

1.973 

.753 

16.01 

8.95 

19.98 

Group  I' 

1 890 

13.724 

1.912 

1.373 

1898 

11.248 

1.827 

1.176 

18.04 

4.45 

14.35 

Group  II 

1890 

10.952 

2.029 

.828 

1898 

9.975 

1.786 

.617 

8.92 

11.98 

25.48 

Group  III.... 

1893 

11.534 

2.076 

.663 

1897 

10.933 

2.001 

.605 

5.21 

3.61 

8.75 

Group  IV 

1893 

15.387 

2.406 

.763 

1897 

13.885 

2.262 

.648 

9.76 

5.99 

15.07 

Group  V 

1893 

IS. 660 

2.435 

.927 

1897 

16.434 

2.337 

.864 

11.93 

4.02 

6.80 

Group  VI.... 

1892 

15.089 

2.292 

.983 

1896 

14.117 

2.181 

.917 

6.44 

4.S4 

6.71 

Group  VII... 

1891 

13.410 

2.501 

1.333 

1895 

12.400 

2.486 

1.098 

7.53 

0.60 

17.63 

Group  VIII.. 

1891 

16.216 

2.377 

1.217 

1895 

14.660 

2.275 

1.161 

9.60 

4.29 

4.60 

Group  IX.... 

1891 

26.844 

2.587 

1.363 

1895 

23.1)50 

2.398 

1.253 

10.78 

7.31 

8.07 

1891 

16.082 

2.328 

1.631 

1895 

14.063 

2.153 

1.261 

12.55 

7.52 

22.69 

The  foregoing  table  shows  that,  for  the  United 
States,  mail  rates  declined  16.04  per  cent  in  the  eight 
years  from  1800  to  1898,  while  passenger  rates  de- 
clined but  8.0.5  per  cent.  During  the  same  period 
the  decline  in  freight  charges  amounted  t<>  10. OS 
per  cent. 

An  examination  of  the  averages  for  the  several 
geographical  districts,  in  accordance  with  which  the 


82 


THE   POSTAL   DEFICIT. 


data  are  classified,  shows  that  the  decline  in  mail 
rates  has  varied  from  5.21  per  cent  in  group  III 
to  18.04  per  cent  in  group  I.  The  range  in  passen- 
ger charges  was  from  six-tenths  of  one  per  cent  to 
11.98  per  cent,  and  in  freight  rates  from  4.60  to 
25.48  per  cent.  In  considering  the  extent  of  the  de- 
cline of  each  class  of  rates  for  each  group,  the  differ- 
ent periods  of  time  which  the  respective  comparisons 
cover  should  be  borne  in  mind.  It  appears  that  the 
decline  in  mail  rates  has  exceeded  that  in  passenger 
rates  in  every  group  but  one,  and  has  also  exceeded 
that  in  freight  rates  in  four  of  the  ten  groups.  The 
fact  that  mail  invariably  receives  passenger  train 
service  should  not  be  lost  sight  of  while  examining 
these  data. 

Comparisons  of  average  mail  rates,  in  which  all 
routes  on  particular  railways  are  represented,  with 
other  charges  via  the  same  roads  can  also  be  made. 
Such  comparisons  for  two  railways  follow : 


ft 

Rates  per  mile  in 
cents. 

Per  cent  of  decline. 

Railways. 

** 

03 

GO      i 

S-     03 

0>   o3   .' 
bXi  &,£ 
5         el 

0>     &*     £ 

oi  cu  5" 

£^- 
a, 

ft 

Oh 

■i— 

tt  o 

•— 

ft 

r-i     O 
•r-    H-> 

OS 

03      1 

Si    OO 

<x>  c«  -j 
ol  Cu® 
C         51 

4)   ^    - 

» &i 

Oh 

s- 

Ph 

CD 

Chicago  &  "j 
Northwestern  > 
railway J 

Union  Pacific  j 
railroad j 

1885 
1897 

1888 
1897 

21.78 
13.87 

9.4 

7.2 

2.379 
2.053 

2.238 
2.057 

1.194 

.978 

1.173 

.988 

36.32 
23.40 

13.70 
8.09 

18.09 
15.77 

THE    POSTAL    DEFICIT. 


83 


•  The  foregoing  does  not  require  extended  com- 
ments. It  shows  that  on  at  least  two  great  railways 
the  operation  of  the  law  providing  mail  pay  has  been 
more  effective  in  securing  reduced  charges  than  the 
natural  economic  forces  of  which  so  much  is  written 
in  producing  corresponding  changes  in  rates  on  other 
traffic. 

After  examining  the  foregoing,  one  is  prepared  for 
the  statement  that  the  percentage  of  the  total  postal 
expenditure  paid  out  for  transportation  has  declined 
without  much  interruption  since  railways  began  to 
carry  the  mail.  This  proportion  amounted  to  6S.6 
per  cent  in  1700,  and  there  had  been  no  substantial 
change  up  to  1837,  when  railway  mail  service  began. 
The  following  statement  will  be  of  interest  in  this 
connection : 

PERCENTAGE  OF  POSTAL  EXPENDITURES  PAID  FOR  TRANSPORTATION'. 


Decade. 

Highest. 

Lowest. 

Average. 

1837-1846 

88.0 

62.2 

82.6* 

48.5 

51.1 

44.5 

63.7 
53.6 
39.0 
43.9 
43.8 
42.1 

69. 24 

1847-1856 

56.43 

1857-1866 

1867-1876 

1877-18S6 

52.26 

46.:>2 
46.60 

1887-1896 

4:;. 29 

*  Due  to  increased  expenditure  for  star-route  service. 

The  percentages  of  all  postal  expenditures  paid  for 
transportation  in  1897  and  1898  were  42.1  and  41. -J 
respectively.  The  foregoing  results  have  been  ac- 
complished very  largely  through  the  substitution  of 


84  THE    POSTAL    DEFICIT. 

railways  for  more  costly  means  of  transportation  in* 
the  mail  service. 

No  one  can  make  a  careful  and  unbiased  exami- 
nation of  the  present  laws  for  paying  railways  for  the 
services  which  they  perform  without  being  strongly 
impressed  that  they  were  framed,  from  the  point  of 
view  at  least  of  securing  such  services  on  the  most 
favorable  terms  consistent  with  efficiency,  with  sin- 
gular wisdom.  They  have  worked  steadily  and  rap- 
idly toward  the  reduction  of  the  average  rate  per 
unit  of  weight,  and  such  conclusions  as  are  justified 
by  the  limited  data  available  indicate  that  the  de- 
cline per  unit  of  space  has  been  much  greater. 

THE    ATTACK    ON   THE    PRESENT    SYSTEM. 

In  spite  of  the  decline  that  has  taken  place  and  the 
improvement  in  railway  mail  service  by  which  it 
has  been  accompanied,  there  has  been  considerable 
effort  to  show  that  the  present  rates  are  excessive, 
and  propositions  for  their  reduction  have  been  rather 
noisily  advocated  in  certain  quarters.  The  reduc- 
tions proposed  have  ranged  from  about  10  per  cent 
of  the  present  rates  to  75  per  cent.  It  is  probably 
due  to  the  gentleman  who  made  the  latter  sugges- 
tion to  add  that  he  advocated  a  present  reduction  of 
25  per  cent,  to  be  followed  by  an  investigation  which 
he  felt  assured  would  show  that  the  greater  reduc- 
tion was  desirable.  A  United  States  Senator  intro- 
duced an  amendment  to  the  Post-office  appropriation 
bill  providing  for  a  reduction  of  one-third  in  the 
present  rates. 


THE    POSTAL    DEFICIT.  85 


MR.    PINLEY    ACKER. 

It  is  unfortunate  that  the  adverse  discussion  of  the 
present  rates  of  mail  pay  should  be  so  thoroughly 
identified  with  one  or  two  men  whose  erroneous  state- 
ments, probably  made  in  good  faith,  have  so  misled 
the  public  that  it  is  impossible  thoroughly  to  present 
the  current  situation  without  references  of  a  personal 
character.  The  most  prominent  of  these  gentlemen 
is  Mr.  Finley  Acker,  a  manufacturing  confectioner 
of  Philadelphia,  a  man  evidently  of  much  public' 
spirit,  of  unbounded  enthusiasm  and  persistence,  and 
with  very  limited  knowledge  of  statistical  methods 
or  of  economic  science.  In  1898  Mr.  Acker  was  a 
representative  of  the  Philadelphia  Trades' League  in 
the  National  Board  of  Trade,  and  as  such  he  man- 
aged to  secure  the  adoption  of  a  series  of  resolutions 
regarding  mail  pay  which  have  constituted  the  basis 
of  the  attack  upon  the  present  law.  These  resolu- 
tions constitute  a  series  of  misstatements,  either  in 
express  terms  or  by  implication.  They  dealt,  how- 
ever, with  matters  not  familiar  to  the  members  of 
that  body,  and  were  adopted  without  more  than 
formal  discussion  and  probably  without  attracting 
much  notice,  or  anything  lik<*  a  complete  realization 
of  their  importance.  The  statements  that  have  beeo 
shown  to  be  erroneous  and  the  facts  now  established 
in  regard toeach  subject  areshowD  in  parallel  columns 
below : 


w1 

86  THE   POSTAL    DEFICIT. 

MISSTATEMENTS   IN    RESOLUTIONS.  THE   TRUTH. 

First.  That  railway  mail  pay  Average  mail  rate  per  ton 
had  not  declined  in  twenty  per  mile  in  1878,  23.167  cents  ; 
years.  in  1898,  12.567  cents  ;  decline, 

45. 75  per  cent. 

Second.  That  the  rate  paid  Average  mail  rate,  $12.57  per 
to  railroads  for  hauling  mail  ton  per  100  miles,  or  12.567 
averaged  $40  per  ton  per  100  cents  per  ton  per  mile;  53.90 
miles,  or  40  cents  per  ton  per  per  cent  of  mail  transportation 
mile.  by  rail  charged  less  than  9  cents 

per  ton  per  mile  ;  only  2.86  per 
cent  pays  as  much  as  40  cents 
per  ton  per  mile. 

Third.  That  the  average  pay-  •  Average  distance  hauled,  438 
ment  for  carrying  mail  average  miles;  average  rate  per  100 
distance  by  rail  was  $6.58  per  pounds  per  mile,  6.2835  mills; 
100  pounds.  product  (average  rate  for  aver- 

age distance),  $2.75. 

Fourth.  That  the  Depart-  Number  of  postal  cars  June 
ment  pays  $6,250  per  annum  30,  1898,  921;  annual  rate  of 
for  postal  cars.  payment,   same   date,  $4,175,- 

724.86  ;  average  per  postal  car, 
$4,533.90.  Number  of  compart- 
ment cars  furnished  free,  2,585. 

The  first  misstatement  was  indirect  and  is  found 
in  the  words,  "  The  law  determining  the  rates  for 
hauling  mail  matter  has  not  been  modified  in  twenty 
years."  No  one  who  examines  the  context  can  doubt, 
however,  that  this  was  meant  to  convey  the  impression 
that  there  had  been  no  reduction,  and  in  his  speech 
in  regard  to  the  resolutions,  Mr.  Acker  did  so  state, 
as  will  appear  from  the  following  extract : 

"  The  free  discussion  of  Mr.  Loud's  bill  upon  the  floor  of  the 
House  resulted  in  directing  attention  to  another  feature,  which 
may  bear  as  direct  a  relation  to  the  causes  of  the  deficit  as  the 
abuses  connected  with  second-class  matter,  and  that  is  the  ex- 


THE    POSTAL    DEFICIT.  87 

cessive  rates  which  the  Government  is  said  to  be  paying  th* 
railroads  for  the  transportation  of  mail  matter,  and  which  ratee 
have  not  been  changed  during  (fie  past  twenty  years."* 

The  truth  is  that  Mr.  Acker  is  an  enthusiastic  ad- 
vocate of  the  reduction  of  letter  postage  to  one  cent 
per  ounce.  He  has  heen  led  by  his  desire  to  aid  in 
the  accomplishment  of  that  result  to  urge  a  reduc- 
tion in  railway  pay  that  would  offset  the  loss  in 
revenue  that,  he  thinks,  would  result  from  a  50 
per  cent  reduction  in  rates  for  letter  mail.  He  has 
made  no  substantial  contribution  to  the  investiga- 
tion of  railway  mail  pay,  but  has  surrounded  the 
discussion  with  voluminous  misstatements  and  vio- 
lent prejudices  that 'have  grown  out  of  them. 

In  spite  of  his  voluminous  contributions  to  the 
discussion  there  would  be  no  value  in  a  lengthy  ex- 
amination, of  his  arguments.  His  final  word  seems 
to  be  that  mail  transportation  is  governed  by  what 
he  calls  the  "  commutation  principle,"  and  while  this 
is  not  as  evidently  absurd  as  the  suggestion  that  the 
half  rates  charged  children  show  that  railways  make 
passenger  rates  on  a  weight  basis,  it  is  equally  use- 
less as  an  aid  to  a  reasonable  conclusion.  Commu- 
tation passenger  rates,  to  which  Mr.  Acker  refer-. 
furnish  one  of  the  most  perfect  examples  of  the  ad- 
justment of  rates  with  the  idea  of  fostering  traffic  by 
means  of  the  lowest  practicable  charges.  They  in- 
volve a  careful  and  constant  study  of  the  ability  of 
travelers  to  meet  them,  and  their  prompt  modifica- 
tion in  the  face  of  changed  conditions  Is  essential  to 


*  The  italics  are  the  present  writer'-. 


88  THE    POSTAL    DEFICIT. 

satisfactory  results.  They  are  also  closely  connected 
with  suburban  freight  traffic, and  hence  can  be  made 
exceptionally  low. 

The  value  of  Mr.  Acker's  testimony  before  the 
Joint  Postal  Commission,  which  includes  all  of  the 
statements  made  before  the  National  Board  of  Trade 
as  well,  has  been  appraised  by  Professor  Adams. 
When  he  was  last  before  that  commission,  the  follow- 
ing colloquy  occurred  between  Mr.  Loud  and  Pro- 
fessor Adams : 


it 


Mr.   Loud:  Have  you  examined  Mr.    Acker's  testimony, 
Professor ;  if  so,  of  what  value  is  it  as  a  guide  to  our  action  ? 

"  Mr.  Adams:  I  cannot  think  that  Mr.  Acker's  testimony  is 
of  any  very  great  importance.  It  is  some  time  since  I  read  it. 
I  read  it  immediately  upon  its  being  published,  and  so  far  as 
his  argument  rests  upon  the  average  haul  of  passenger  and 
freight,  it  is  not  correct,  because  he  misused  the  figures.  And 
then  this  report  on  the  weighings  of  mails  has  come  out  since 
then,  and  that  shows  that  his  estimate  of  the  average  haul  of 
mail  is  also  incorrect." 

Professor  Adams  was  accorded  an  opportunity  to 
revise  the  testimony  given  by  him  on  the  occasion 
referred  to,  and  in  the  revision  he  made  the  forego- 
ing still  stronger.  The  following  may  be  taken, 
therefore,  as  representing  his  deliberate  judgment : 

"  On  the  whole,  however,  I  cannot  think  Mr.  Acker's  testi- 
mony will  prove  to  be  very  helpful.  When  he  first  appeared 
before  this  commission  he  rested  his  case  upon  an  erroneous 
statement  of  the  rate  per  ton  per  mile,  and  upon  his  second 
appearance  he  rested  his  argument  upon  an  erroneous  state- 
ment relative  to  the  average  length  of  haul  for  mail,  for  freight, 
and  for  passengers." 


THE    POSTAL   DEFICIT.  89 

MK.    JAMES    LEWIS    COWLES. 

Next  to  Mr.  Acker,  the  man  who  has  been  most 
influential  in  determining  the  form  of  the  attack  is 
Mr.  James  Lewis  Cowles,  of  Farmington,  Connecti- 
cut. Mr.  Cowles  is  the  author  of  a  book  entitled 
"A  (leneral  Freight  and  Passenger  Post,"  in  which 
he  advocates  uniform  fares,  regardless  of  distance, 
for  each  class  of  accommodations  in  passenger  trains 
and  similarly  adjusted  charges  for  freight.  It  is 
quite  natural  that  any  one  who  believes  that  one  dol- 
lar would  be  a  fair  charge  for  carrying  a  passenger 
from  Xew  York  to  San  Francisco  should  regard  the 
present  scale  of  postal  pay  as  excessive.  Mr.  Cowles' 
ideas  concerning  the  proper  scope  of  the  postal  serv- 
ice are  partially  expressed  in  the  following  extracl 
from  the  testimony  taken  by  the  Joint  Postal  Com- 
mission : 

"  Q.   I   want  to  get  at  something.     I  understand  that    the 
remedy  which  you  suggest  is  embodied  in  your  bill  ? 

"A. "Yes,  sir. 

"  Q.  Let  me  see  if  I  understand  it  correctly.  Is  it  proposed 
that  the  Post-office  Department,  together  with  the  Interstate 
Commerce  Commission,  should  extend  the  postal  business  of 
ili»-  country  so  as  to  cover  all  public  transportation  of  persons, 
baggage,  parcels,  and  general  freight,  and  that  it  shall  d<>  that 
at  a  rate  for,  say,  passengers  ranging  from  five  cents  to  five  dol- 
lars per  trip  ? 

"A.   From  five  cents  to  one  dollar  per  trip  for  ordinary  cars, 
but  where  you  use  parlor  cars  25  cents  extra." 

The  questions  in  the  foregoing  were  by  Mr.  Moody, 
answers  by  Mr.  Cowles.     The  following,  containing 
answers  by  Mr.  I  lowles  to  questions  by  Mr.  ( alchin. 
is  also  instructive : 

7 


90  THE   POSTAL   DEFICIT. 

"  Q.  Why  not  carry  all  of  the  freight  of  the  people,  too  ? 

"A.  We  "should,  most  assuredly.  I  want  to  say  simply  this 
much:  That  was  the  original  purpose  of  the  post-office  as  run- 
ning back  to  the  time  of  James  VII  in  England. 

"  Q.  I  mean  carry  the  freight. 

"A.  I  mean  precisely  that. 

"  Q.  And  the  people,  too  ? 

"A.  And  the  people,  too. 

"  Q.  Do  you  think  the  Government  should  own  the  trans- 
portation lines  of  all  kinds? 

"A.  I  think  all  public  transportation  should  be  done  by  the 
Government. 

"  Q.  Railroads,  telephones,  telegraphs,  express  business, 
everything? 

11  A.  Most  assuredly.  That  is  precisely  what  my  bill  con- 
templates, and  just  precisely  what  my  book  leads  up  to,  and 
just  precisely  what  the  conservative  men  of  the  city  of  Boston 
are  looking  forward  to." 

Though  Mr.  Cowles'  book  has  constituted  an 
arsenal  for  those  who  have  attacked  the  present 
system,  he  has  contributed  no  facts  to  the  discussion. 
It  is  obvious,  therefore,  that  any  time  spent  in  the 
examination  of  his  conclusions  by  those  who  dis- 
agree radically  with  the  premises  upon  which  they 
are  dependent  would  be  quite  useless. 

It  wrould  be  possible  to  accumulate  evidence 
almost  indefinitely  all  tending  to  establish  the  fact 
that  the  misstatements  that  have  been  referred  to 
constitute  the  foundation  of  whatever  public  senti- 
ment antagonistic  to  the  present  system  has  existed 
or  can  be  found  now  to  exist.  Thus  Dr.  Spahr,  of 
the  editorial  staff  of  the  Outlook,  a  most  influential 
periodical,  repeats  the  misleading  statement  that 
there  has  been  no  reduction  in  railway  mail  pay 
since  1878,  and  declares  that,  this  is  one  of  "  a  few 
broad  facts"  which  led  his  journal  to  take  the  ground 
that  "  the  railroads  were  extravagantly  overpaid." 


THE    POSTAL    DEFICIT.  91 


THE    [NVESTIGATION, 


Congress  naturally  felt  the  force  of  the  public 
clamor  thus  aroused,  and  some  of  its  members  were 
led  to  urge  action  so  drastic  in  its  nature  that  had 
the  measures  they  proposed  been  adopted  the  result 
must  have  been  disastrous  in  the  extreme.  Wiser 
and  more  conservative  minds  recognized  the  danger, 
and  some  saw  at  the  outset  that  the  allegation  that 
rates  were  extortionate  was  based  upon  misstate- 
ments and  would  fall  to  the  ground  when  the  latter 
were  uncovered.  Under  these  circumstances  Con- 
gress very  wisely  and  properly  decided  upon  an  in- 
vestigation, and  a  Joint  Postal  Commission,  consist- 
ing of  four  members  of  the  Senate  and  an  equal 
number  of  members  of  the  House  of  Representatives, 
was  provided  for  in  the  postal  appropriation  bill, 
which  was  approved  by  the  President  on  June  13, 
1S0S.  This  commission,  which  is  still  in  existence, 
was  directed — 

"to  investigate  the  question  whether  or  not  excessive  prices 
are  paid  to  the  railroad  companies  for  the  transportation  of  the 
mails  and  as  compensation  for  postal-car  service,  and  all 
sources  of  revenue  and   all  expenditures  of  the  postal  Bervice, 

and   rates  of  postage  upon  all  postal  matter." 

Work  in  accordance  with  this  mandate  began  at 
once  and  continues  at  the  present  time.  The  Com- 
mission ha-  collected  and  published  an  exceedingly 
valuable  mass  <»f  testimony.  This  testimony  and 
the  data  collected  by  the  agents  especially  employed 
to  investigate  different  phases  of  the  questions  sub- 


92  THE   POSTAL   DEFICIT. 

mitted  to  the  Commission  contain  material  for  a  most 
accurate  and  complete  description  of  postal  activities 
and  methods.  This  information  has  heen  very  lib- 
erally drawn  upon  in  the  preparation  of  the  present 
work. 

THE   ADAMS    REPORT. 

One  of  the  most  important  steps  taken  by  the 
Commission  was  the  employment  of  Professor  Henry 
C.  Adams,  head  of  the  department  of  economics  in 
the  University  of  Michigan  and  statistician  to  the 
Interstate  Commerce  Commission,  to  whom  was  dele- 
gated the  duty  of  compiling,  arranging,  and  present- 
ing such  statistical  data  as  would  throw  light  upon 
the  subjects  of  the  investigation.  Though  the  in- 
structions given  to  Professor  Adams  have  not  been 
made  public,  it  appears  that  the  Commission  also 
directed  him  to  present  such  recommendations  as 
seemed  to  him  desirable. 

Professor  Adams  brought  to  this  work  a  high 
reputation  both  as  a  statistician  and  as  an  economist. 
He  had  been  favorably  known  to  the  public  and 
especially  to  railway  men  for  many  years  on  account 
of  his  connection  with  the  statistical  work  of  the  In- 
terstate Commerce  Commission  and  of  the  Eleventh 
Census.  Had  he  approached  the  grave  and  difficult 
problems  with  which  he  had  to  deal  in  the  broad 
and  impartial  spirit  of  an  arbitrator,  with  an  in- 
flexible desire  to  weigh  with  the  utmost  care  the 
considerations  on  both  sides,  the  greatest  good  might 
have  resulted  from  his  employment.     Unfortunately, 


THE    POSTAL    DEFICIT.  93 

however,  Professor  Adams  appears  at  the  outset  to 
have  misconceived  the  ohjects  which  Congress  wished 
to  attain  by  means  of  the  Commission.  He  appears 
to  have  been  dominated  throughout  Ins  entire  inves- 
tigation by  the  idea  that  Congress  had  prejudged  the 
case  and  had  delegated  to  the  Commission,  not  the  duty 
of  impartially  investigating  the  facts,  but  that  of  con- 
triving means  to  secure  from  the  railways,  in  the 
form  of  a  reduction  in  mail  pay,  a  material  contribu- 
tion to  the  elimination  of  the  postal  deficit.  In 
accordance  with  this  idea,  his  conception  of  his 
own  duties  as  an  expert  employe  of  the  Commis- 
sion appears  to  have  been  that  he  must  devise  a 
practical  scheme  for  the  reduction.  It  is  necessary 
to  introduce  this  personal  aspect  of  the  case  because 
of  the  paramount  importance  of  the  work  accom- 
plished by  Professor  Adams,  which  is,  at  the  present 
time,  the  only  argument  in  favor  of  lower  railway 
mail  pay  that  has  not  been  shown  to  be  based  upon 
gross  misrepresentations.  It  is  also  the  only  one 
that  is  sufhcientlv  scientific  in  form  or  method  to 
receive  the  respectful  attention  of  a  student.  The 
importance  attached  by  the  Commission  to  the  reporl 
rendered  by  Professor  Adams  as  the  result  of  hia 
labors  was  indicated  by  Mr.  Loud,  when  at  a  public 
hearing  on  April  7,  1900,  the  latter  addressed  the 
former  as  follows  : 

" .     .      .      it  must  be  admitted   that  if  your  report  can  be 
fully  substantiated,  it  must  end  the  case." 

The  statement  that  Professor  Adams  believed  him- 
self to  be  charged  with  the  duty  of  devising  a  scheme 


94  THE   POSTAL   DEFICIT. 

for  eliminating,  at  least  a  large  part  of  the  postal 
deficit  at  the  expense  of  the  railways  would  not  be 
made  on  slight  evidence,  and  should  not  be  accepted 
unless  established  in  the  most  complete  and  irrefu- 
table manner.  There  need  be  no  doubt,  however, 
upon  this  subject.  Professor  Adams  has,  with  most 
laudable  candor,  taken  the  public  fully  into  his 
confidence  and  explained  with  considerable  detail 
the  impressions  under  which  he  proceeded.  In  the 
formal  report  which  contains  the  results  of  his  labor 
he  declares : 

"If,  then,  a  reduction  in  railway  mail  pay  is  necessary,  or 
even  desirable,  for  the  interests  of  the  postal  service  (and  this 
may  be  assumed  as  the  judgment  of  Congress,   since  otherwise  this 
question  would  not  have  been  formally  raised.*)     .     .     .  ' 

The  foregoing  is  equivalent  to  saying  that  Con- 
gress would  not  provide  for  an  investigation  unless 
it  had  already  come  to  a  conclusion  concerning  the 
subject  to  be  investigated.  It  should  be  compared 
with  the  clause,  already  quoted,  providing  for  the 
Commission,  which  states  clearly  that  the  duty  of  the 
Commission  was  "  to  investigate  the  question  whether 
or  not  t  excessive  prices  are  paid  to  the  railroad 
companies  for  the  transportation  of  the  mails    .    .    ." 

Again,  in  a  deliberate  and  evidently  studied  re- 
vision of  testimony  given  before  the  Commission, 
Professor  Adams  said  : 

"  I  assumed  that  the  purpose  of  this  Commission  was  to  efface 
the  deficit  in  the  post-office  administration.  ...  In  view- 
ing this  entire  matter,  I  came  to  the  conclusion  that  $3,000,000 

*The  italics  are  the  present  writer's, 
f  The  italics  are  the  author' s. 


THE    POSTAL   DEFICIT.  95 

was  the  limit  that  could  reasonably  be  asked  from  railways. 
.  .  .  Starting,  then,  with  the  necessary  saving  in  the  rail- 
way mail  compensation  <>f  $3,000,000,  in  order  to  achieve  tin- 
end  which  I  had  supposed  this  commission  had  placed   before 

itself,     ..." 

Iii  spite,  however,  of  this  unfortunate  misunder- 
standing of  the  purposes  of  Congress  and  of  the 
Commission,  Professor  Adams'  work  has  thrown  ma- 
terial light  upon  the  conditions  of  the  Railway  Mail 
Service,  and  has  resulted  in  the  complete  refutation 
of  every  claim  upon  which  the  reduction  of  railway 
mail  pay  was  formerly  urged.  He  has  forever  set  at 
rest  the  allegations  that  the  railways  receive  forty 
cents  per  ton  per  mile  ;  that  there  has  been  no  reduc- 
tion in  mail  pay:  that  the  average  haul  of  mail  is 
328  miles,*  and  that  postal  cars  rent  for  more  per 
annum  than  their  original  cost. 

The  statistics  compiled  under  Professor  Adams' 
direction  are  of  vital  importance,  and  throw  light 
upon  the  Railway  Mail  Service  which  make-  possible 
a  more  complete  and  satisfactory  knowledge  of  its 
operations  than  was  previously  attainable.  They 
were  compiled  with  unmistakable  sincerity  of  pur- 
pose, and  it  is  only  fair  to  add  that  the  misconcep- 
tion of  the  purposes  of  the  investigation  that  has 
been  referred  to  was  not  permitted  to  affect  the 
methods  used.  It  will  be  necessary,  however,  to  pre- 
sent some  criticisms  of  the  statistical  methods  em- 
ployed in  the  investigation,  which  make  the  results 

*Or  81o  miles.  The  same  individual  at  different  tim<->  used 
each  distance  as  the  basis  of  an  argument,  and  l»oth  arguments 
were  urged  with  equal  vehement 


96  THE   POSTAL   DEFICIT. 

of  the  present  law  appear  less  favorable  to  the  Gov- 
ernment than  would  be  the  case  if  they  were  more 
accurately  portrayed. 

The  most  significant  contribution  to  the  data  con- 
cerning railway  mail  services  and  pay  made  by  Pro- 
fessor Adams  is,  beyond  all  question,  the  tabulation 
of  the  information  contained  in  the  records  of  the 
Post-office  Department  in  such  a  manner  as  to  estab- 
lish the  amount  of  transportation  of  mail  annually 
performed  by  the  railways,  expressed  in  the  familiar 
ton-mile  unit.  Unfortunately  the  method  adopted 
was  such  as  considerably  to  impair  the  value  of  the 
results.  The  latter  show  the  transportation  which  is 
made  the  basis  of  compensation,  but  by  no  means  show 
the  actual  quantity  performed.  Professor  Adams  did 
not  overlook  this  defect,  but  appears  either  to  have 
underrated  it  or  to  have  been  unwilling  to  resort  to 
the  simple  expedient  necessary  approximately  to 
eliminate  it.  His  explanation  of  the  method  em- 
ployed follows : 

"It  is  the  practice  of  the  Department  to  weigh  the  mail  on 
each  route  in  each  district  for  thirty  consecutive  working  days 
once  in  four  years,  and  to  accept  this  weighing  as  the  basis  of 
payment  for  the  four  years  following.  According  to  the  law,  the 
basis  of  payment  is  '  average  weight  of  mails  per  day  carried 
over  whole  length  of  route.'  .  .  .  This  being  the  case,  the 
aggregate  ton-mileage  of  mail  carried  over  the  railways  of  the 
United  States  may  be  determined  by  computing  the  ton-mileage 
by  routes  and  aggregating  the  results.  This  was  done  for  each 
year  subsequent  to  1873.     .     .     . " 

Continuing,  Professor  Adams  called  attention  to 
the  defect  of  this  method  as  follows : 

"  Under  this  method  of  procedure  it  is  of  course  evident  that 
the  ton- mileage  of  mail  in  the  United  States  for  any  particular 


THE    POSTAL    DEFICIT. 


97 


year  cannot  rest  upon  the  weighings  of  the  year  named.  It 
represents  rather  the  amount  of  mail  in  one  of  the  four  districts 
for  the  year  under  investigation,  to  which  is  added  the  amount 
of  mail  determined  by  the  weighings  of  the  three  years  previous, 
respectively,  in  the  three  other  weighing  districts.  For  ex- 
ample, the  ton-mileage  statistics  of  mail  presented  in  this  report 
for  1898  would  be  the  sum  of  the  weighing  for  ls«»s  in  district 
4;  for  1897  in  district  1  ;  for  1S96  in  district  2  ;  for  1895  in 
district  3." 

Before  presenting  a  more  technical  criticism,  it  is 
necessary  to  call  attention  to  a  formal  error  in  the 
foregoing  extract.      Its  author  does  not  state   cor- 

rectlv  the  method  which  he  used,  but  assumes  that 
he  has  brought  the  statistics  of  ton-mileage  a  full 
year  nearer  to  the  actual  weighings  in  each  districl 
than  is  actually  the  case.  There  was  a  weighing  in 
the  fourth  weighing  district  in  1898,  but  its  results 
were  not  used  by  Professor  Adams  in  determining 
the  ton-mileage  of  that  year.  The  ton-mileage  given 
in  the  report  for  the  year  1898  was  made  up  as  fol- 
lows : 


Weighing  district. 


No. 
No. 
No. 
No. 


1. 

•_> 

:;' 
4. 


Total 


Ton- mileage. 


73,227,667 
90,622,588 
47,620,441 
61,243,321 


272,714,017 


The  total  used  for  L898  does  not,  therefore,  con- 
tain a  single  unit  representing  mail  weighed  during 

that  year,     it  is  perfectly  true  that  the  result   rej.nj- 


98  THE    POSTAL   DEFICIT. 

sents  the  aggregate  of  the  ton-mileage  that  is  the 
basis  of  compensation,  but  it  is  obviously  far  short  of 
the  amount  carried,  and  yet  it  will  be  accepted,  if 
accepted  at  all,  as  being  an  approximation  of  the 
latter,  and  will  become,  as  Professor  Adams  has 
already  made  it,  the  basis  of  calculations  as  to  the 
average  receipts  per  ton  carried. 

Under  the  method  adopted,  the  result  of  each 
weighing  in  each  district,  expressed  in  ton-miles,  is 
used  for  four  successive  years,  beginning  with  the 
year  after  the  one  in  which  it  took  place,  as  an  ele- 
ment in  calculating  the  total  number  of  ton-miles, 
and  this  calculation  consists  merely  of  adding  the 
separate  items.  This  method  involves  the  assump- 
tion that  the  ton-mileage  in  every  district  remains 
constant  for  four  years  and  then  moves  forward  with 
a  sudden  increment,  only  to  remain  stationary  for 
another  quadrennial  period.  Of  course  no  one  be- 
lieves this  to  be  true ;  yet,  unless  it  is  the  case,  the 
ton-mileage  given  by  Professor  Adams  is  invariably 
too  small  and  the  average  rates  per  ton  per  mile  in- 
variably too  high.  The  following  statement  shows 
how  great  has  been  the  difference  in  the  ton-mileage 
resulting  from  successive  weighings  in  district  1. 
It  can  be  taken  as  a  type  of  the  entire  country,  and 
will  show  how  serious  an  error  must  result  from 
neglecting  to  consider  interquadrennial  increases  : 


THE    POSTAL    DEFICIT. 


99 


DISTRICT    NUMBER   ONE. 

Ton-mileage. 


Year  of  weighing. 


» 

1869 

1873 

1877 

1881 

1885 

1885) 

1893 

1897 


Amount. 


6,513,655 
13,737,677 
15,851,752 
23,316,828 
30,155,323 
43,993,235 
66,819,535 
73,227,667 


Increase  over  preced- 
ing weighing. 


Amount. 


7,224,022 
2,114,075 
7,465,076 
6, 838,  -4  9  5 
13,837,912 
22,826,300 
6,408,132 


Per  cent. 


110.91 
15.39 
47.09 
29.33 
15.89 
51.89 
9.59 


Although  extreme  irregularity  is  an  especially 
noticeable  feature  of  the  foregoing  statement,  it  can- 
not he  doubted  that  the  quadrennial  increases  were 
in  each  case  distributed  throughout  the  periods  be- 
tween the  weighings.  Professor  Adams  ignored  this 
fact — at  least  in  practice — and  declared  in  regard  to 
the  results  secured  by  his  methods  that — 


<<  'pi 


This  is  as  close  as  it  is  possible  to  arrive  at  the  quantity  of 
mail  carried  in  any  particular  year  in  the  United  States." 

This  was  certainly  a  mistaken  conclusion,  for,  with- 
out  claiming  that  the  increases  were  distributed 
evenly  over  the  interquadrennial  periods,  it  is  safe 
to  assert  that  their  arbitrary  distribution  in  thai 
manner  must  result  in  closer  approximations  of  the 
truth  than  entirely  to  ignore  the  fact  of  their  actual 
distribution.     This  is  a  simple  expedient,  one  easily 


100 


THE    POSTAL   DEFICIT. 


understood,  and  by  no  means  imposes  an  arduous 
task  upon  the  statistician.  The  following  presents 
a  comparison  of  the  results  of  the  method  suggested 
and  of  that  employed  by  Professor  Adams  in  rela- 
tion to  the  first  weighing  district  and  for  the  period 
from  1889  to  1898,  inclusive : 


Professor  Adams' 
method. 

The  correct  method. 

ge     of 
in  ton- 
by  cor- 

thod. 

Year. 

Weigh- 
ing year 
used. 

Ton-mile- 
age. 

Source   of  figures 
used. 

Ton-mile- 
age. 

Pereenta 
increase 
mileage 
rect  me 

1889 

1885 
1889 
1889 
1889 
1889 
1893 
1893 
1893 
1893 
1897 

30,155,323 
43,993,235 
43,993,235 
43,993,235 
43,993,235 
66,819,535 
66,819,535 
66.819,535 
66,819,535 
73,227,667 

43,993,235 
49,699,810 
55,406,385 
61,112,960 
66,819,535 
68,421,568 
70,023,601 
71,625,634 
73,227,667 
74,429,191 

45  89 

1890 

12.97 

1891 

Estimate 

25.94 

1892 

Estimate 

38  91 

1893 

Actual  weighing 

Estimate 

51.89 

1894 

2  40 

1895 , 

Estimate 

4  80 

1896 

Estimate 

7.19 

1897 

Actual  weighing 

Estimate 

9.59 

1898 

1.64 

In  explanation  of  the  column  that  has  been  indi- 
cated as  showing  the  correct  method,  it  should  be 
said  that  the  weighings  have  been  supposed  to  show 
the  actual  tonnage  of  the  year  in  which  they  are 
taken  instead  of  the  year  following.  It  is  true  that 
they  are  not  made  the  basis  of  payment  until  the 
year  after  that  in  which  they  are  taken,  but  that  is 
no  reason  for  adding  to  this  injustice,  if  it  may  be 
so  called,  the  denial  of  the  fact  that  the  service  per- 
formed is  greater  than  that  paid  for.  In  estimating 
for  the  years  subsequent  to  the  latest  weighing  the 
extremely  conservative  rule  has  been  adopted  of 
assuming  the  continuance  of  an  annual  increase,  but 


THE   POSTAL   DEFICIT. 


101 


fixing  the  amount  at  but  three-fourths  of  that  of  the 
previous  quadrennial  period.  (  onsidering  the  com- 
mercial conditions  of  the  last  five  or  six  years,  it  is 
evident  that  this  materially  understates  the  services 
actually  performed,  but  it  was  considered  better  to  err 
upon  the  side  of  caution. 

A  correct  statement  of  the  actual  ton-mileage  of 
the  country  would  be  secured  by  making  a  series  of 
estimates  such  as  that  in  the  foregoing  table  for  each 
weighing  district  and  combining  the  results  for  each 
year.  In  order  further  to  indicate  the  importance  of 
this  criticism  and  to  show  the  effect  of  the  use  of  the 
wrong  method,  the  following  comparisons,  relating 
to  the  whole  country,  are  introduced  : 


Ton-mileage. 

Rate  per  ton  per  mile 
in  cents. 

Year. 

Professor 
Adams' 
method. 

The  correct 
method. 

Professor 
Adams' 
method. 

The  correct 
method. 

1878 

1883 

1888 

1893 

1898 

24,687,923 

39,755,061 

72,444,857 

112,830,405 

203,195,521 

272,714,017 

34,986,496 

52,624,560 

92,551,975 

152,815,777 

244,757,219 

295,520,353* 

26.420 
23.167 
17.828 
16.268 
13.973 
12.567 

18.646 

17.502 
13.955 
12.012 
11.601 

11.598* 

♦The  extremely  conservative  rule  adopted  in  estimating  y.-ars  subse- 
quent to  the  latest  weighings  unquestionably  makes  the  ton-mileage  of 
1898  too  low  and  the  average  rate  too  bigh.  As  the  estimates  for  the  earlier 
years  are  more  accurate,  this  results  in  an  apparently  Bmall  decline  during 
the  later  years. 


102  THE    POSTAL   DEFICIT. 

This  defect  in  the  method  of  determining  ton- 
mileage  of  mail  affects  nearly  all  of  his  most  impor- 
tant tables,  and  especially  those  which  show  average 
rates  per  ton  per  mile  or  attempt  to  compare  the  in- 
crease in  passenger  and  freight  traffic  with  that  in 
mail  traffic.  It  should  be  borne  in  mind  and  suit- 
able allowance  made  for  it  whenever  conclusions 
based  upon  it  are  used.  The  uncorrected  data  have 
been  used  in  this  paper  because  the  error  which  they 
contain  is  invariably  prejudicial  to  the  conclusions 
in  regard  to  railway  mail  pay  that  have  approved 
themselves  to  the  present  writer,  and  for  the  reason 
also  that  it  has  not  been  considered  desirable  to  an- 
ticipate a  discussion  of  the  statistical  methods  by 
which  they  were  obtained. 

Before  considering  the  principles  governing  mail 
pay,  as  presented  by  Professor  Adams,  it  is  advisable 
to  examine  some  of  his  minor  conclusions  concerning 
the  conditions  of  railway  mail  transportation. 

One  of  these  is  that  the  expense  of  speed  is  greatly 
overestimated.  Possibly  the  following  quotation 
somewhat  overstates  Professor  Adams'  contention, 
but  it  has  been  selected  with  a  view  to  presenting  it 
as  clearly  as  possible  in  his  exact  words.  Whatever 
qualification  was  intended  must  here,  as  in  his  re- 
port, be  read  between  the  lines  or  supplied  by  the 
reader.     He  said  : 

"  In  the  same  way  that  the  rapid  worker  can  produce  a  quan- 
tity of  goods  at  lower  cost  than  the  slow  worker,  so  a  speedy 
train  can  render  a  service  more  cheaply  than  a  slow  train.  The 
operating  expenses  which  increase  with  increased  speed  are 
relatively  small  when  compared  with  those  upon  which  a  sav- 
ing is  made  by  speed.     .     .    .     The  correctness  of  this  view 


THE    POSTAL    DEFICIT.  103 

must  be  acknowledged  when  it  is  recognized  that  the  burden  of 
speed  to  the  railways  does  not  arise  so  much  from  the  increase 
of  the  cost  of  a  fast  train  over  a  slow  train,  all  elements  of  cost 
being  taken  into  account,  as  from  the  decrease  of  the  loud 
rendered  necessary  by  the  increase  of  speed.  .  .  .  The 
economic  speed  for  any  train  is  a  resultant  arising  from  balanc- 
ing the  saving  of  expense  occasioned  by  high  speed  against  the 
saving  of  revenue  occasioned  by  low  speed." 

Of  course,  Professor  Adams  is  not  ignorant  of  the 
fact  that  train  employes  are  almost  always  paid  per 
mile  run  and  not  per  hour  or  day  of  definite  dura- 
tion, though  he  appears  from  the  foregoing  to  have 
temporarily  overlooked  it.  He  is  also  in  complete  dis- 
agreement with  all  practical  railway  men  in  regard 
to  the  effect  of  speed  upon  cost.  This  is  not  a  question 
that  the  statistician  can  determine  with  his  ordinary 
tools,  and  in  the  present  state  of  knowledge  it  is  better 
left  to  those  whose  duties  have  given  them  practical 
acquaintance  with  the  subject.  Such  a  man  is  Mr. 
Frederick  A.  Delano,  superintendent  of  motive  power 
of  the  Chicago,  Burlington  and  Quincy  railroad,  who 
appeared  before  the  Joint  Postal  Commission  on  June 
26,  1900.  It  is  proper  to  add  that  his  testimony  was 
not  available  when  Professor  Adams  made  his  report. 
This  testimony  contains  unmistakable  evidence  of 
the  careful  and  continued  study  oiven  to  the  question, 
and  should  be  examined  thoroughly  by  any  one  who 
wishes  to  be  fully  conversant  with  this  phase  of  the 
subject.  Only  the  briefest  extract  can  be  given,  and 
that  will  scarcely  represent  the  conclusions  with  ac- 
curacy, for  it  cannot  indicate  the  care  taken  to  quality 
them  and  explain  their  essential  limitations.  The 
following  gives  Mr.  Delano's  Language: 


THE   POSTAL   DEFICIT. 

I  should  say,  taking  all  the  factors  into  consideration,  that 
the  cost  increases  fully  half  again  more  rapidly  than  the  speed. 
For  example,  I  mean  by  that  that  if  the  speed  was  doubled  the 
cost  would  be  trebled." 

The  importance  of  this  disagreement  between  the 
author  of  the  report  and  practical  railway  men  lies 
in  the  fact  that  mail  is  given  to  the  fastest  trains 
available,  and  that  the  direct  cost  is  therefore  affected 
by  whatever  conditions  determine  the  relation  be- 
tween the  direct  expenses  incurred,  respectively,  for 
fast  and  slow  trains. 

Another  calculation  in  the  report  that  can  scarcel}7 
be  sustained  is  expressed  in  the  following  extract : 

"If,  however,  one  analyzes  the  operating  expenses  of  rail- 
ways, he  finds  a  considerable  part  of  the  items  to  which  this 
expense  does  not  pertain.  Thus  'station  expenses,'  'station 
supplies,'  '  advertising  agencies,'  and  a  large  number  of  other 
expenses  do  not  pertain  to  the  traffic  handled  for  the  most  part 
by  the  employes  of  an  outside  agency.  Probably  $100,000,000 
out  of  the  grand  total  of  $800,000,000  '  operating  expenses  ' 
should  be  excluded  when  considering  the  cost  of  the  mail  serv- 


ice. 


It  is  obvious  to  remark  that  as  an  offset  to  the  op- 
erating expenses  that  are  in  no  way  contributory  to 
the  mail  service  there  are  other  expenses,  perhaps  not 
separately  stated  in  the  reports  to  the  Interstate 
Commerce  Commission,  which  relate  exclusively  to 
that  service.  The  maintenance  of  cranes  and  catch- 
ers, messenger  service  in  connection  with  the  rule 
requiring  railways  to  take  and  deliver  mail  when 
the  post-offices  are  within  one-quarter  of  a  mile  of 
their  stations,  may  be  especially  mentioned.  Re- 
gardless of  this  offset,  however,  the  statement  is  not 
correct.     Of  the  three  expenses  referred  to  by  Profes- 


THE    POSTAL    DEFICIT. 


105 


sor  Adams,  "  advertising  "  alone  has  no  relation  to  the 
mail  service.  Those  who  recall  the  explanation  of 
what  the  railways  do  for  the  Government  in  connec- 
tion with  the  postal  service  are  already  aware  that 
station  services  are  by  no  means  an  unimportant  fac- 
tor. This  has  been  shown  by  extract-  from  the 
Postal  Laws  and  Regulations,  and  the  statement  ap- 
plies to  station  supplies,  including  stationery,  as  well 
as  to  other  station  expenses. 

The  statement  given  by  Professor  Adams,  which 
purports  to  show  the  distance  at  which  "  profit  on 
transportation   turns    into   loss"   for   the   different 
classes  of  mail  when  carried  by  rail,  is  also  inaccurate 
and  misleading.     It  is  of  comparatively  slight  im- 
portance, but  should  be  corrected.     It  is  based  pri- 
marily on   the   assumptions   that   the   Government 
pays  to  the  railways  thirty-five  per  cent  of  the  earn- 
ings on  each  class  of  mail  transported  by  rail,  and 
that  each  piece  of  mail  carried  is  of  the  maximum 
weight    allowed    for    the    amount    of   postage    paid. 
Thus  the   Government   charges   two  cents   for  one 
ounce  of  sealed  first-class  matter,  which  is  at  the  rate 
of  si;  lo  per  ton,  regardless  of  distance.     Thirty-five     fa 
per  cent  of  $640  is  $224,  and  this  divided  by  12.561 
.■cut-,  the  average  rate  per  ton  per  mile  ascertained 
bv  Professor  Adams,  gives  1,782  miles  as  the  maxi- 
mum  distance  which  a  piece  of  first-class  mail  can 
be  carried  without  a  greater  cost  to  the  Government, 
for  transportation,  than  thirty-five  per  cent  of  the 
amount  received.     Professor  Adams  gives  this  as  the 
distance  at  which  profit  turns  into  loss.     Both  of  the 

8 


106 


THE    POSTAL    DEFICIT. 


assumptions  are,  however,  inaccurate.  The  postage 
actually  received  on  each  class  of  mail  matter  is 
given  by  the  Department  in  the  annual  report  for 
1899,  and  in  each  case  varies  materially  from  the 
rate  calculated  by  assuming  that  each  piece  of  mail 
is  of  maximum  weight.  Thus  the  receipts  for  first- 
class  matter  average  85.6  cents  per  pound  instead  of 
32  cents.  Again,  while  the  Department  does  pay  ap- 
proximately 35  per  cent  of  its  receipts  to  the  railways, 
it  must  be  borne  in  mind  that  the  mail  carried  by  rail 
is  the  more  profitable  portion.  Probably,  in  spite  of 
the  losses  incurred  on  second-class  matter,  the  deficit 
would  be  wiped  out  if  the  postal  service  could  be  con- 
fined to  points  reached  by  railways.  This,  however, 
would  not  be  desirable.  No  correction  for  the  latter 
error  is  attempted  in  the  following  table,  in  which 
figures  based  on  the  actual  receipts  for  each  class  are 
put  by  the  side  of  those  given  in  the  report  by  Pro- 
fessor Adams: 

Distance  at  which  profit  turns  to  loss  on  the  assumption  that 
65  per  cent  of  earnings  are  required  for  other  expenses  than 
those  incurred  for  railway  service. 


For  first-class  mail 

For  second-class  mail 

For  third-class  mail 

For  fourth-class  mail  (ordinary) 
For  fourth- class  (seeds,  etc.)  . . . 

For  foreign  mail 

For  postal  cards 


As  given  by 

Professor 

Adams. 


1,782  miles 

56      " 

446      " 

891      " 


The  correct 
figures. 


4,768  miles 

45 

819 

947 

512 

2,562 

10,483 


THE   POSTAL    DEFICIT.  107 

The  concluding  three  items  were  not  estimated  by 
Professor  Adams,  but  are  added  to  make  the  state- 
ment complete.  The  average  rate  per  ton  per  mile 
for  mail  calculated  by  Professor  Adams  is  also  used, 
though  it  makes  the  distances  too  short. 

The  next  condition  stated  in  the  report,  which  re 
quires  discussion,  relates  to  the  variation  in  the 
volume  of  mail  from  day  to  day  and  month  to  month. 
Professor  Adams  appears  to  think  that  an  argument 
in  favor  of  low  rates  can  be  predicated  upon  the  as- 
sumption that  mail  moves  with  substantial  regu- 
larity. In  the  testimony  given  by  him  in  New  York 
on  November  23,  1899,  he  said : 

"Among  the  considerations  favorable  to  the  argument  that 
railway  mail  compensation  might  with  propriety  be  reduced 
are  the  following:  This  traffic  is  sure  traffic  to  the  railways;  it 
is  steady  traffic,  and  while  it  may  be  true  that  a  heavier  weight 
of  mail  passes  west  than  passes  east,  ....  it  does  not  vary 
from  month  to  month  as  does  the  passenger  traffic.  It  is  dis- 
tributed with  a  fair  degree  of  equality." 

The  present  writer  knows  of  no  evidence  substan- 
tiating the  foregoing  in  more  than  the  most  general 
sense,  and  there  is  a  great  deal  of  testimony,  some  of 
which  has  already  been  summarized  in  describing 
railway  services,  that  indicates  that  it  may  not  be 
correct.  Superintendent  Bradley  says  that  thedaily 
variation  in  mail  leaving  New  York  city  amounts 
to  60  per  cent.  It  is  not  possible  to  do  more  at  the 
present  time  than  to  suggest  that  the  assumption 
that  mail  traffic  docs  not  fluctuate  materially  re- 
quires demonstration  before  it  can  properly  be  made 
the  basis  of  action. 


108  [the  postal  deficit. 

There  are  two  portions  of  Professor  Adams'  report 
which,  although  relatively  inconspicuous  in  treat- 
ment and  comparatively  insignificant  in  length,  espe- 
cially attract  the  student,  because  they  appear  to  be 
deliberate  attempts  to  determine  what  would  con- 
stitute reasonable  railway  pay,  or  at  least,  with  par- 
ticular reference  to  the  one  first  to  be  considered, 
the  minimum  limits  of  such  pay,  by  inductive 
methods.  As  such  they  differ  materially  from  all 
other  portions  of  the  report.  The  following  extract 
from  the  report  will  serve  as  an  introduction  to  the 
discussion  of  one  of  these  attempts  and  at  the  same 
time  indicate  the  importance  attached  to  it : 

"The  question  whether  or  not  railways  are  overpaid  under 
the  law  of  1873  is  reducible  to  the  question  whether  or  not  the 
Pennsylvania  railroad,  the  New  York  Central,  the  Chicago, 
Burlington,  and  Quincy  railroad,  and  the  Union  Pacific  rail- 
road are  overpaid  for  the  service  which  they  render." 

The  calculation  proposed  is  as  follows : 

"  The  two  most  important  mail  routes  in  the  country  are  the 
Philadelphia  and  New  York  route,  over  the  Pennsylvania  rail- 
road, and  the  New  York  and  Buffalo  route,  over  the  line  of  the 
New  York  Central  railroad.  The  former  has  an  average  daily 
weight  of  309,000  pounds  per  mile  of  line,  which,  for  ease  of 
calculation,  will  be  called  150  tons  per  mile  per  day.  Confining 
attention  for  the  moment  to  the  Pennsylvania  route,  it  appears 
that  this  route  receives  an  annual  compensation  of  $3,422  per 
mile  of  line,  a  condition  which  presents  the  following  question  : 
Can  the  Pennsylvania  road  afford  to  carry  150  tons  of  mail  daily 
between  New  York  and  Philadelphia  for  less  than  $3,422  an- 
nually per  mile  of  line,  or  $93.75*  per  mile  of  line  per  day? 

"The  answer  to  the  above  question  depends  entirely  upon 
the  manner  in  which  the  freight  is  moved.  According  to  Mr. 
Bradley,  Superintendent  of  Railway  Mail  Service  of  this  divis- 
ion, mail  goes  upon  140  trains  daily,  26  of  which,  however, 
perform  90  per  cent  of  the  service.     This  is  important  informa- 

*An  obvious  error.     The  amount  should  read  $9.37?. 


THE    POSTAL    DEFICIT.  L09 

tion,  for  it  indicates  thai  the  ear  unit  and  train  unit  are  a  Bafe 
basis  of  calculation  upon  this  route.  The  average  loading  of 
the  post-office  car,  according  to  the  testimony  before  tin-  Com- 
mission, is  2  tons.  It  must  be  admitted,  in  view  of  the  great 
weight  of  these  cars,  that  such  loading  pays  little  regard  to  the 
requirements  of  economy.  It  is  doubtful  if,  on  the  basis  of  such 
loading,  the  railways  could  afford  to  carry  mail  at  a  rate  much 
cheaper  than  it  is  now  carried.  On  the  other  hand,  if  cars  were 
loaded  with  :>]  tons,  which  Mr.  Davis  says  is  an  'easy  load,'  or 
should  the  average  load  go  as  high  as  <>  tons,  which,  according 
to  testimony,  is  accomplished  on  the  Pennsylvania  railroad  by 
its  special  mail  train.  1  am  confident  that  railways  operate  upon 
a  marginal  profit  in  carrying  mail  that  warrants  a  reduction  in 
pay.  The  calculation  upon  which  the  above  conclusion  rests  is 
as  follows:  At  2  tons  per  car  150  tons  of  mail  would  demand 
that  75  cars  be  passed  over  each  mile  of  the  Philadelphia  and 
New  York  route  per  day.  This  would  be  the  equivalent  of  8 
trains  per  day  run  at  passenger  speed. 

"The  average  cost  pertrain  mile,  all  operating  expenses  being 
taken  into  account,  is  slightly  under  SI.  As  stated  above,  it  is 
assumed  to  be  SI.  This  would  make  $8  per  mile  per  day  charge- 
able to  operating  expenses,  which  increased  by  33  per  cent 
for  fixed  charges  and  dividends,  improvements  chargeable  to 
incomes,  investments,  and  the  like,  would  give  $10.40  per  mile 
per  day  properly  chargeable  to  mail  service.  This  multiplied 
by  obVithis  multiplier  ought  to  be  decreased  in  the  proportion 
that  Sunday  service  is  less  than  week-day  service)  would  give 
$3,796  per  mile  per  year  as  the  cost  of  mail  service.  This  amount 
is'an  excess  of  the  amount  which  the  route  actually  received. 
If,  however,  the  basis  of  the  estimate  be  modified,  and  if  it  be 
assumed  that  each  car  is  loaded  with  31  tons,  as  stated  in  the 
testimony  of  the  superintendent,  a  similar  computation  shows 
that  the  road  would  expend  for  its  mail  service  an  annual  sum 
per  mile  of  line  of  $2,244,  which  is  considerably  less  than  the 
amount  received  per  mile  of  line  on  this  route." 

The  foregoing  will  be  discussed  independently  of 
the  questions  concerning  the  average  Loading  of  postal 
cars  which  it  naturally  raises,  because  that  subjeel 
wouldrequire  rather  extended  commenl  and  relates 
quite  as  closely  t<>  the  examination  of  the  specific  re- 
ductions proposed  by  Professor  Adams,  which  will 
constitute  a  more  important  part  of  this  work  and 
will  be  taken  up  hereafter.     One  qualification  n(  the 


110  THE   POSTAL   DEFICIT. 

foregoing  introduced  in  the  report  should  be  quoted. 
It  is  as  follows : 

"The  above  calculations  are  submitted  in  part  as  an  emphatic 
expression  of  the  fact  that  one  must  know  every  detail  under 
which  traffic  is  carried  on  dense  routes  before  he  can  judge 
whether  the  present  compensation  is  or  is  not  overpayment." 

Professor  Adams  also  asserts  that  the  calculation 
quoted — 

"is  the  same  sort  of  calculation  that  a  railway  manager  would 
adopt  if  called  upon  to  face  the  question  whether  a  specific 
charge  for  a  specific  service  should  be  yet  further  reduced  or  the 
service  abandoned." 

It  is  submitted  that  in  the  foregoing  quotation 
Professor  Adams  has  fallen  into  the  error  against 
which  he  warns  the  Commission  and  others  when  he 
declares  on  page  223  that  the  "  bane  of  statistics  is 
the  mathematical  average."  In  the  first  place,  he  has 
used  an  average  which,  while  it  agrees  substantially 
with  that  given  for  all  trains  in  the  United  States, 
freight  as  well  as  passenger,  and  also  for  the  group 
in  which  the  New  York-Philadelphia  route  is  located, 
is  considerably  lower  than  that  which  his  own  report, 
rendered  as  statistician  to  the  Interstate  Commerce 
Commission,  applies  to  the  Pennsylvania  railroad. 
The  average  for  the  United  States  (figures  for  1898 
are  used,  as  that  is  the  year  used  by -Professor  Adams) 
is  95.635  cents,  and  for  the  group  in  question  94.985 
cents,  but  for  the  Pennsylvania  railroad  the  average 
is  $1.12842.  Merely  allowing  for  this  difference 
would  change  Professor  Adams'  conclusion  on  the 
basis  of  2  tons  from  $3,796  to  $4,294,  and  that  on 
the  basis  of  3J  tons  per  car  from  $2,244  to  $2,539  as 


THE    POSTAL    DEFICIT.  1  1  1 

the  cost  to  the  Pennsylvania  railroad  per  mile  per 
day.*  But  this  would  be  merely  to  repeat,  albeit  on 
a  slightly  safer  basis,  the  misuse  of  a  mathematical 
average,  and  could  be  only  misleading.  It  is  intro- 
duced solely  to  show  one  of  the  inherent  dangers  of 
such  a  calculation.  The  average  cost  per  mile  of 
$1.12842  for  the  Pennsylvania  railroad  represents 
all  trains,  both  passenger  and  freight;  it  represents 
the  results  of  operating  the  Pennsylvania  Limited 
as  well  as  local  freight  trains;  it  represents  results 
on  the  lines  that  have  four  tracks  and  block-signal- 
ing apparatus,  100-pound  rails,  and  miles  of  elevated 
city  tracks,  as  well  as  those  of  the  least  expensively 
equipped  branches.  The  mail  is  carried  on  the  most 
expensive  trains,  and  the  route  in  question  is  over 
what  is  probably  the  most  expensive  stretch  of  track 
of  its  length,  not  only  of  the  Pennsylvania  rail- 
road, but  in  the  United  States.  Is  it  reasonable,  in 
the  face  of  these  facts,  to  suppose  that  the  average 
operating  cost  per  train  mile  is  no  higher  for  the 
New  York-Philadelphia  route  than  for  the  Pennsyl- 
vania railroad  as  a  whole?     Professor  Adams  urges 

*  Professor  Adams1  calculation  also  contains  a  mathematical 
error  that  would  seriously  impair  its  value  even  ha<l  it  hern  based 
on  sound  premises.  He  adds  33  per  cent  of  operating  expense* 
as  an  allowance  for  fixed  charges.  This  error  is  evidently  due 
to  the  fact  that  total  railway  expenditures  are  distributed  in 
about  the  relation  of  67  and  33  between  operating  expenses 
and  fixed  charges,  respectively.  However,  33  ia  nearly  50  per 
cent  of '17,  and  though  fixed  charges  are  about  33  percent  of 
total  expenditures,  they  are  approximately  50  percent  of  oper- 
ating expenses.  Allowance  for  this  as  well  as  tor  the  error  just 
discussed  would  raise  the  estimate,  <>n  the  basis  of  two  tons  per 
car.  from  $3,796  to  $4,831  and  that  on  the  basis  of  three  and 
onedialf  tons  from  $2,244  t<>  S^s.jfi. 


112  THE   POSTAL    DEFICIT. 

that  it  costs  no  more  per  mile  to  operate  a  passenger 
train  than  to  run  a  freight  train,  but  this,  by  no 
means,  meets  the  difficulty.  If  the  average  passen- 
ger train  cost  per  mile  were  ascertained  with  abso- 
lute definiteness  (a  thing  in  itself  impossible)  for  the 
Pennsylvania  railroad,  it  would  still  be  unwise  and 
misleading  to  attempt  to  use  it  for  such  a  calcula- 
tion. If  any  railroad  officer  does  use  such  an  aver- 
age in  the  manner  indicated,  as  is  claimed,  he  merely 
deceives  himself  and  those  who  depend  upon  his 
judgment.  It  will  not  be  out  of  place  to  add  that 
the  demand  for  facilities  for  prompt  and  rapid  dis- 
patch of  mail  has  so  affected  the  New  York-Phila- 
delphia route  that  the  number  of  pounds  of  mail 
carried  per  single  trip  was  but  3,099  in  1897,  against 
3,367  in  1881.  The  rate  per  ton  per  mile,  as  given 
by  General  Shallenberger,  was  6.4  cents  in  1881,  and 
the  earnings  per  single  trip  $9.70,  while  in  1897  the 
average  rate  was  5.8  cents,  and  the  earnings  per 
single  trip  $8.15,  or  15.98  per  cent  less  than  sixteen 
years  earlier. 

The  next  attempt  makes  use  of  the  comparative 
method  by  placing  the  average  mail  rates  of  certain 
routes  in  juxtaposition  with  the  rates  charged  for 
particular  quantities  of  express  and  of  first-class 
freight  when  shipped  from  one  of  the  termini  of  the 
same  route  to  the  other.  This  comparison  is  intro- 
duced with  the  remark : 

"As  corroborative  evidence  of  the  impression  that  railway 
mail  compensation  upon  dense  routes  constitutes  overpayment 
to  the  railways,  the  following  statement  is  introduced.    .     .     .' 


THE    POSTAL    DEFICIT. 


113 


And  it  is  followed  by  the  observation  that — 

"The  data  in  the  above  table,  properly  interpreted,  support 
the  impression  that  railway  mail  rates  are  relatively  higher  than 
freight  rates  or  express  rates,  and  that  this  excess  payment  ex- 
tends not  only  to  the  dense  routes,  but  to  all  routes." 

It  is  clear  from  the  foregoing  extracts  that  Pro- 
fessor Adams  assigns  to  the  table  in  question  (table  P, 

pp.  237,  238,  of  the  report)  a  position  of  material 
i  mportance  in  the  argument  upon  which  the  reduc- 
tions in  mail  pay  which  he  proposes  are  based.  The 
table  includes  a  large  number  of  points,  of  which  six 
of  the  first  seven  are  shown  below,  one  being  omitted 
because  the  data  are  not  complete  in  the  report : 


Per  ton  of  2,000  pounds. 


From  Now  York  to — 


Mail      Freight  Expiess 


Buffalo $81.65 

Chicago 71.39 

Onion  Pacific  Transfer.  107.67 

Ogden 192.85 

San   Francisco 265.63 

Philadelphia 6.57 


n  • 

15.00 
29.40 

7.-..  in 

60.00 

4.4u 


$12.50 
25.00 
15.00 

1  n :,.iin 

135.00 

7..-,.  i 


Per  hundredweight. 


Mail       Freight 


$1.58 

5.38 

9.64 

13.28 

.33 


|0.39 

.75 

1.47 

3.77 

3.00 


Express 


$0.63 
1.25 
2.25 

.-..-J.", 
6.75 


The  foregoing  has  been  slightly  rearranged  in 
order  to  save  space,  but  the  substance  of  the  table, 
as  presented  by  Professor  Adams,  is  unaltered.  It 
will  be  observed  that  the  rates  are  given  for  two 
units  of  weight,  those  per  hundredweight  being  the 
quotient  of  those  per  ton  divided  by  twenty.  Under 
these  circumstances  the  discussion  need  be  applied 
to  but  the  lasl  three  columns.  It  is  obvious  thai  if 
the  rates  in  the  table  arc  accurate  and  comparable 
the  payment  for  mail  service  exceeds  the  payment  for 


114  THE   POSTAL   DEFICIT. 

first-class  freight  on  each  of  the  routes  indicated,  and 
exceeds  that  for  express  on  five  of  the  six  routes  given. 
This  inference  is  supported  by  Professor  Adams'  com- 
ments upon  the  table.  It  merits,  however,  a  somewhat 
closer  examination.  The  average  rates  given  for  mail 
represent  the  entire  mail  traffic  over  the  routes  in  ques- 
tion. The  shipments  of  mail,  as  was  shown  when 
the  methods  of  weighing  mail  were  considered,  are 
among  all  of  the  stations  along  the  several  routes, 
and  the  estimated  weight  carried  over  the  whole 
route  is  obtained  by  reducing  the  traffic  of  inter- 
mediate points  to  its  equivalent  in  pounds  carried 
over  the  whole  route ;  thus  the  payment,  though 
based  upon  an  estimated  weight  carried  between* 
termini,  is  not  for  a  service  exclusively  between  such 
points,  but  for  one  which  involves  the  receipt  and 
delivery  of  mail  at  each  intermediate  station  as  well 
as  at  the  termini.  For  example,  the  route  between 
New  York  and  Buffalo,  on  which  the  rate  of  $1.58 
per  100  pounds  of  mail  is  quoted  by  Professor 
Adams,  has  133  post:omces  and  points  of  exchange. 
The  average  100  pounds  of  mail  to  which  the 
rate  as  quoted  is  applied  is  made  up  of  many 
separate  pieces,  some  of  which  must  be  presumed 
to  have  been  received  and  others  to  have  been 
delivered  at  each  post-office  and  point  of  exchange. 
The  actual  number  of  pieces  in  an  average  100 
pounds  of  first-class  mail  is  probably  more  than 
4,000.  On  the  other  hand,  the  shipment  of  first- 
class  freight,  with  which  Professor  Adams  has  com- 
pared this  complex  of  mail  shipments,  is  an  actual 


THE    POSTAL    DEFICIT.  115 

single  shipment  from  one  consignor  to  one  consignee, 
traversing  the  entire  distance  from  New  York  to  Buf- 
falo  in  an  uninterrupted  journey.  The  New  York 
Central  and  Hudson  River  railroad,  which  is  the 
line  over  which  the  New  York  and  Buffalo  mail  is 
routed,  receives  relatively  higher  rates  on  shipments 
from  New  York  to  intermediate  stations  than  on 
those  to  Buffalo,  as  well  as  on  traffic  wholly  between 
intermediate  stations  and  from  the  latter  to  Buffalo. 
It  also  receives  relatively  higher  rates  on  shipments 
of  less  than  100  pounds,  but  these  are  probably  few. 
To  obtain  a  satisfactory  comparison  between  first- 
class  freight  rates  and  mail  rates  on  the  New  York 
to  Buffalo  route  it  would  be  necessary  to  take  the 
freight  rates  between  every  possible  combination  of 
stations,  including  the  termini,  on  the  route,  to  reduce 
the  traffic  taken  at  each  rate  to  its  equivalent  in  a  com- 
mon unit  of  weight  carried  the  whole  length  of  the 
route,  and  then  secure  a  weighted  average  in  which 
each  rate  should  be  given  representation  proportionate 
to  the  quantity  of  transportation  to  which  it  is  applied. 
The  task  is  a  considerable  one,  but,  with  the  co-opera- 
tion of  the  officers  of  the  railway,  bv  no  means  an 
impossible  one.  However,  no  one.  with  the  possible 
exception  of  Mr.  Acker,  is  now  likely  to  propose 
freight  rates  as  a  proper  measure  of  reasonable  mail 
rate-.  The  comparison  just  discussed,  though  ob- 
noxious to  sound  and  logical  statistical  principles,  is 
qoI  likely  seriously  to  mislead  anyone.  This  cannot 
be  said  of  the  comparison  with  express  payments, 
which  is  contained   in  the   same   table.     In  a  later 


116  THE    POSTAL   DEFICIT. 

portion  of  this  work  it  will  be  shown  that  the  serv- 
ice performed  for  the  Post-office  Department  is  so 
different  from  that  performed  for  the  express  com- 
panies that  comparisons  between  the  payments  for 
each  are  of  a  very  limited  value.  This  objection 
will  be  passed  over  at  the  present  time,  and  only 
the  misleading  character  of  the  comparison  pre- 
sented by  Professor  Adams  will  be  discussed.  Every- 
thing which  has  been  said  in  regard  to  the  funda- 
mental error  of  comparing  the  average  rate  obtained 
from  a  complex  of  mail  shipments,  only  a  portion 
of  which  traversed  the  whole  length  of  a  route, 
with  freight  rates  for  traffic  traversing  the  entire 
distance  should  be  understood  as  applying  with  su- 
perior force  to  an  effort  to  compare  the  same  average 
with  express  payments  for  through  shipments.  In 
the  case  of  the  comparison  with  express  payments 
there  is  the  added  error,  equal  if  not  greater  than 
the  first,  of  basing  the  comparison  on  shipments  of 
100-pound  packages  of  express.  The  express  pay- 
ments used  by  Professor  Adams  were  obtained  by 
taking  the  express  rate  on  100-pound  packages  and 
assuming  that  half  of  each  rate  is  paid  to  the  railway 
for  the  services  performed  in  behalf  of  the  express 
company.  The  basis  of  50  per  cent  for  this  purpose 
was  obtained  by  adding  to  40  per  cent,  which  is  the 
basis  of  some  contracts,  an  arbitrary  of  10  per  cent 
more  as  an  allowance  for  the  services  performed  for 
the  railways  and  the  payments  directly  to  railway  em- 
ployes. The  evidence  shows,  however,  that  express 
contracts  call  for  cash  payments  of  from  40  to  55  per 


THE    POSTAL    DEFICIT.  1  1  , 

cent  of  gross  express  earnings,  and  frequently  include 
minimum  guarantees  in  addition.  There  is  also 
some  contention  that  the  allowance  for  services  per- 
formed is  too  low.  Assuming,  however,  thai  50  per 
cent  is  the  actual  proportion  of  gross  express  reve- 
nue that  is  paid  to  the  railways,  it  should  be  remem- 
bered that  it  is  a  percentage  of  gross  revenue  and  not 
of  the  revenue  on  any  particular  shipment.  Express 
business  is  essentially  a  small  package  business,  and 
much  of  it  is  between  points  located  within  short  dis- 
tances of  each  other.  The  railway  gets  all  of  the 
business  along  a  particular  line  and  is  willing  to  carry 
the  large  and  low-rate  packages  along  with  the  small 
and  high-rate  packages,  because  the  average  payment 
resulting  from  all  of  the  business  is  satisfactory.  It  is 
certainly  unreasonable  to  suppose  that  it  would  ac- 
cept on  all  express  traffic  the  smallest  amount  which 
is  added  to  its  revenue  from  this  source  by  the  least 
remunerative  kind  of  business  that  the  express  com- 
pany conducts.  Yet  this  is  exactly  the  assumption 
that  Professor  Adams  has  made.  He  admits  that  the 
selection  of  average  express  rates  would  have  resulted 
in  raising  the  rates  above  those  shown.  The  rates  on 
100-pound  packages  are  absolutely  the  lowest  known 
to  the  express  companies,  yet  so  few  packages  of  that 
weight  are  received  that  it  scarcely  atl'eets  the  average 
returns.  Eleven  car-loads  of  express  leaving  New 
York  in  one  night  over  the  same  route  traversed  by 
New  York  to  Buffalo  mail  contained  only  nineteen 
packages  which  weighed  as  much  as  LOOpounds.  Mr. 
Julier,  the  General  Manager  of  the  American  Expr*  - 


118 


THE   POSTAL   DEFICIT. 


Company,  certainly  a  competent  authority,  regards  a 
typical  package  as  one  weighing  7  pounds.  The  same 
authority  has  furnished  the  actual  average  payment 
made  by  the  express  company  to  the  railways  on  cer- 
tain of  the  routes  selected  by  Professor  Adams.  If  a 
comparison  of  mail  routes  with  express  payments, 
based  on  weight  carried,  has  any  value  at  all,  it  should 
be  made  with  such  averages.  The  following  table 
shows  comparisons  for  a  few  selected  points  between 
the  data  used  bv  Professor  Adams  and  those  furnished 
by  Mr.  Julier : 


From — 


New  York 
New  York 
New  York 
Chicago  . . 
Chicago  . 
Cincinnati 
Cincinnati 


To- 


Buffalo 

Chicago 

Omaha 

Milwaukee.. 
New  Orleans 
St.  Louis. . . . 
Cleveland. . . 


Express  payments 
per  100  pounds. 


n   O     . 

fl     02     (-i 

>  g£ 

•r1    s-,  ^3 

rj2  "  ^ 


50.63 

1.25 

2.25 

.30 

2.13 

.75 

.63 


<U    02 


O     S 

«  5 

S3 


$1.16 
2.592 
4.89 

.404 
3.165 
1.31 

.92 


The  foregoing  shows  that  in  some  cases  the  data 
used  by  Professor  Adams  were  less  than  half  of  the 
correct  amounts,  while  the  closest  approximation  by 
any  one  of  them  was  too  low  by  more  than  30  per 
cent.  Without  claiming  that  it  throws  any  very  im- 
portant light  upon  the  present  reasonableness  of  rail- 


THE    POSTAL    DEFICIT. 


119 


way  mail  pay.  but  merely  for  the  purpose  of  substi- 
tuting a  correct  comparison  for  an  incorrect  one,  the 
following  table  is  introduced  : 


From — 

To— 

Average     payments    per 
100    pounds  for  railway 
services  in  the  transpor- 
tation of — 

Mail. 

Expiv  — 

New  York 

Buffalo 

$1.58 

3.57 

5.38 

3.27 

2.49 

4.38 

1.33 

.31 

1.83 

5.27 

1.31 

1.20 

1.61 

1.20 

1.26 

$1.16 

New  York. 

Chicago 

2.592 

New  York 

New  York 

New  York 

Chicago 

Indianapolis. .  . 

Ea^t  Saint  Loui-. 
Portland,  Maine.. 

Milwaukee 

Minneapolis 

New  Orleans 
Detroit 

4.89 
2.57 
2.06 
3.50 
1.22 

.404 
2.00 
3.165 

Chicago .        

.75 

Chicago   

Cincinnati 

Chicago  ...    

Cleveland 

1.07 

Cincinnati 

1.31 

1.07 

.92 

In  the  foregoing  the  same  arbitrary  allowance  for 
express  services  rendered  gratuitously  to   railways 
which  was  proposed  and  used  by  Professor  Adam- 
is  used. 


FUNDAMENTAL    PRINCIPL]  - 

Professor  Adams  discusses  tin-  principles  which 
should  govern  the  determination  of  railway   mail 


120  THE   POSTAL    DEFICIT. 

pay  under  three  heads  which  may  be  repeated.    They 
are  : 

1.  The  principle  of  compensation. 

2.  The  principle  of  public  utility. 

3.  The  principle  that  density  of  traffic   enables 
economies. 

He  finds  that  the  principle  of  compensation  is  ap- 
plied to  the  Railway  Mail  Service  in  accordance  with 
the  system  of  jurisprudence  which  came  to  this  coun- 
try from  England,  but  that  it  must  be  applied  subject 
to  certain  practical  limitations  which  grow  out  of  the 
nature  of  the  railway  business.  The  principle  of  com- 
pensation can  successfully  be  applied  only  in  so  far 
as  cost  can  be  either  directly  or  indirectly  ascertained. 
Accounting  and  statistical  methods  are  not  equal  to 
the  task  of  distributing  the  cost  of  furnishing  rail- 
way transportation  among  the  various  services  per- 
formed by  railways,  and  therefore  the  direct  appli- 
cation of  the  principle  of  compensation  is  limited  to 
the  total  return  for  all  of  the  services  performed  by 
a  particular  railway.  This  argument  approves  itself 
^To  all  careful  students  of  the  economic  aspects  of  rail- 
way transportation.  If  any  objection  is  to  be  entered 
it  will  have  to  be  that  that  portion  which  relates  to 
the  distribution  of  cost  of  operation  is  not  expressed 
as  strongly  as  is  desirable.  Such  distribution  is  not 
merely  impracticable.  The  particular  cost  of  a  spe- 
cific service  is  not  merely  not  ascertainable  ;  there  is 
no  such  particular  cost.  Railway  services  are  pro- 
duced at  joint  expense,  as  copper  and  silver  when 


THE    POSTAL   DEFICIT.  121 

both  appear  in  the  same  ore,  as  mutton  and  wool 
produced  from  the  same  animal.  No  one  would 
propose  to  divide  the  food  of  a  sheep  and  say  that  so 
much  was  fed  to  produce  wool  and  so  much  to  pro- 
duce meat,  yet  such  an  effort  would  be  no  more 
absurd  than  to  attempt  to  divide  the  coal  expendi- 
ture of  a  locomotive  between  passengers,  mail,  and 
express. 

THE    PRINCIPLE    OF    PUBLIC    UTILITY. 

The  "principle  of  public  utility'  is  introduced 
with  the  words : 

"  It  is  true  that  pay  to  railways  for  transporting  mails  should 
be  brought  under  the  principle  of  compensation,  but  compen- 
sation tempered  by  the  principle  of  public  utility." 

In  reality  the  principle  of  public  utility  may  be 
regarded  as  a  corollary  of  the  principle  which  de- 
clares that  the  idea  of  compensation  for  the  trans- 
portation services  performed  by  railways  is  limited 
in  its  application  to  the  aggregate  of  those  services 
and  to  the  total  sum  received  therefor.  There  being 
no  specific  cost  assignable  to  particular  services,  it 
follows  that  the  adjustment  of  the  charges  as  between 
different  services  would  have  to  !>•'  attained  in  a 
purely  arbitrary  manner  unless  (he  principle  <>t'  com- 
pensation could  he  supplemented  by  another  that 
would  more  directly  affect  particular  rates.  The 
principle  of  public  utility  satisfies  this  requirement. 
Properly  understood,  it  means  nothing  more  than 
that  the  public  interest  in  the  results  of  railway 

9 


122  THE    POSTAL    DEFICIT. 

transportation  should  be  recognized  in  the  adjust- 
ment of  the  charges  for  the  different  services  per- 
formed. The  public  is  under  an  obligation  to  those 
who  have  furnished  railway  facilities  which  requires 
that  the  total  revenue  collected  as  payment  for  rail- 
way services  shall  be  permitted  to  be  sufficient  in 
amount  to  pay  operating  expenses  and  a  reasonable 
return  to  invested  capital.  On  the  other  hand,  the 
public  has  the  right  to  insist  that  in  raising  such 
revenue  the  amounts  assessed  against  particular 
services  shall  bear  those  relations  to  each  other  which 
will  best  serve  the  general  welfare.  This  principle 
does  not  involve  any  conflict  between  the  owners  of 
railway  property  and  the  shipping  and  traveling 
public.  The  interest  of  the  former  in  the  develop- 
ment of  the  resources  of  the  regions  contiguous  and 
*  tributary  to  their  lines  is  coincident  with  that  of  the 
public  in  the  general  development  of  industry,  and 
both  tend  to  secure  the  same  result  through  the  utili- 
zation of  a  common  means — the  relativelv  reason- 
able  adjustment  of  transportation  charges.  It  is  to 
be  observed  also  that  the  principle  of  public  utility 
will  never  require  the  transportation  of  any  traffic 
for  less  than  the  cost  directly  incurred  in  moving  it, 
but  is  only  applicable  to  the  distribution  among  the 
several  services  of  those  expenses  which  are  jointly 
incurred. 

No  student  of  transportation  will  object  to  Professor 
Adams'  general  statement  of  the  principle  of  public 
utility.  The  idea  which  is  expressed  has  been  ap- 
plied in  railway  practice  ever  since  rate-making  be- 


THE    POSTAL    DEFICIT.  123 

came  at  all  systematized,  and  in  one  form  or  another 
lias  long  been  familiar  to  railway  men.  To  state  a 
principle  correctly  and  to  apply  it  with  precision 
are,  however,  two  very  different  things,  and  Professor 

Adams'  application  of  the  principle  to  the  problem 
of  railway  mail  pay  tails  to  commend  itself,  as  does 
the  statement  which  he  has  formulated.  The  man- 
ner in  which  this  application  is  attempted  will  he 
shown  by  a  series  of  quotations 

"The  principle  of  public  utility  suggests  the  point  of  view 
from  which  to  regard  the  transportation  of  mail.  It  being  ad- 
mitted that  carrying  the  mails  is  a  transportation  service  for 
which  compensation  must  be  allowed,  where  in  the  schedule  of 
services  rendered  by  railways  should  the  transportation  of  mail 
be  classed?  .  .  .  the  transportation  of  mail  should  be 
classed  among  those  services  which  minister  to  the  develop- 
ment of  the  process  of  production  rather  than  to  the  satisfac- 
tion of  wants  through  the  transportation  of  the  products.  Of 
all  things  transported  by  rail  intelligence  is  the  most  essential 
to  social  and  economic  advantage,  and  on  this  account  is  in  the 
highest  degree  amenable  to  considerations  of  public  utility. 
.  .  .  The  application  of  the  principle  of  public  utility  classi- 
fies mail  transportation  with  freight;  it  classifies  it  among  the 
fundamental  or  social  services  of  railways." 

The  following  quotation  will  explain  why.  in  Pro- 
fessor Adams*  opinion,  the  principle  of  public  utility 
classifies  mail  traffic  in  the  manner  indicated  by  the 
foregoing  : 

"  A  railway  manager  is  willing,  for  example,  to  carry  coal  at 
a  very  low  rate  even  at  the  risk  <>f  incurring  loss,  because  he 
knows  that  coal  is  potential  industrial  development,  and  that 
what  In'  losea  on  the  coal  traffic  becomes  for  him  a  gain  on  the 
transportation  of  high-class  freight,  the  product  of  the  mills 
and  factories  which  the  distribution  of  coal  renders  possible. 
The  railway  nuuiau'iT  adjusts  his  charges  upon  coal  with  a 
view  t<>  the  development  of  industry  in  the  territory  contribu- 
ting freight  to  his  railway  rather  than  according  to  the  cost  of 
transporting  coal. 


%\ 


124  THE   POSTAL   DEFICIT. 

11  The  same  line  of  reasoning  is  pertinent,  even  in  a  higher 
degree,  to  the  transmission  of  intelligence,  because  the  means 
of  diffusing  intelligence  is  an  essential  condition  of  growth  and 
development.  As  the  distribution  of  coal,  which  is  latent  man- 
ufacturing power,  is  essential  to  the  upbuilding  of  manufac- 
tories, so  the  diffusion  of  intelligence  is  a  fundamental  condition 
of  all  social  and  industrial  evolution." 

The  conclusion  from  the  line  of  reasoning  indi- 
cated in  the  quotations  already  given  is  as  follows : 

"  .  .  .  Government;has  the  right  to  insist  that  the 
transportation  of  mail  is  an  essential  social  function ;  that  it  is 
imperative,  not  alone  to  the  present  advantage  of  the  public, 
but  to  the  healthful  and  permanent  development  of  the  State. 
It  has  the  right  openly,  publicly,  and  without  apology  to  put 
in  practice,  in  the  interest  of  the  public  at  large,  a  rule  uni- 
versally acknowledged  by  railway  men  in  the  development  of 
their  property.  .  .  .  The  application  of  the  principle  of 
public  utility  .  .  .  justifies  an  unusually  low  rate  upon 
mail  transportation,  provided  this  is  essential  to  rendering  the 
important  service  undertaken  by  the  Postal  Department,  and  pro- 
vided that  by  this  adjustment  the  gross  revenue  to  railways  is  not  so 
far  depressed  as  to  deprive  investors  of  property.'" 

The  concluding  clause  of  the  foregoing  has  been 
italicized  by  the  present  writer  in  order  to  emphasize 
a  modification  introduced  in  this  paragraph  since 
Professor  Adams  first  appeared  before  the  Commis- 
sion. The  change  is  probably  in  the  direction  of 
accurate  statement,  but  the  original  language  will 
serve  to  throw  light  upon  the  meaning  of  the  last 
proviso.  The  sentence  was  originally  phrased  ex- 
actly as  quoted,  except  that  instead  of  the  portion  in 
italics  the  following  appeared  : 

"  Provided  that  the  railways  are  permitted  to  recoup  them- 
selves by  higher  rates  from  other  relatively  less  important  serv- 


ices." 


The    idea    of    recoupment    from    less  important 
services  appears  to  be  quite  prominent  in  Professor 


THE    POSTAL    DEFICIT.  125 

Adams' view.  When  lie  appeared  before  the  Com- 
mission for  further  examination,  after  having  sub- 
mitted his  report,  he  said: 

"In  the  consideration  of  the  theory  of  the  nature  of  trans- 
portation, they  have  the  right  to  reduce  the  railway  mail  pay 
below  cost  and  recoup  on  freight  if  the  public  utility  is  served 
thereby." 

* 

When  revising  his  testimony,  however,  lie  substi- 
tuted for  the  foregoing  the  following : 

"  When  one  considers  the  peculiar  nature  of  the  business  of 
transportation  and  the  intimate  relation  which  it  holds  to  the 
lives  and  interests  of  all  people,  it  certainly  seems  to  me  right 
to  say  that  the  rate  charged  for  any  particular  service  may  be 
below  the  cost  of  that  service,  even  though  it  is  necessary  for 
the  railway  to  recoup  itself  by  a  relatively  higher  charge  upon 
another  service,  provided  public  utility  is  thereby  served.  In 
saving  this,  however,  it  should  be  remembered  that  the  pros- 
perity of  railways  is  to  be  included  within  the  survey  of  public 
utility." 

The  later  statement  means  substantially  the  same 
as  the  earlier,  unless  it  is  believed  that  the  return  to 
investors  in  railway  property  is  now  excessive,  though 
the  language  adopted  in  the  revision  is  probably  less 
likely  to  arouse  antagonism  to  a  reduction  in  mail 
rates.  One  more  quotation  will  clearly  present  Pro- 
fessor Adams"  point  of  view.  In  his  formal  reporl  he 
said  : 

"Of  course,  considerations  of  public  utility  might  keep  the 
rate  on  one  class  of  traffic  high,  notwithstanding  an  increase  in 
its  volume,  but  in  the  case  of  mail  traffic  this  consideration 
would  work  in  quite  the  opposite  direction  on  account  of  the 
fact  that  mail  traffic  is  of  all  classes  of  trattic  the  most  essential 
to  social  and  industrial  growth." 

Briefly  summarized,  the  consideration  of  the  ap- 
plication of  the  principle  of  public  utility  to  the  Rail- 


126  THE    POSTAL    DEFICIT. 

way  Mail  Service,  as  indicated  by  the  quotations  given, 

establishes,  according  to  Professor  Adams,  the  follow- 
ing : 

1.  Mail  traffic  is  of  the  highest  social  importance. 

2.  Mail  traffic  is  entitled  to  the  lowest  rates,  provided  these 
are  necessary  to  adequate  service. 

3.  Railways  are  entitled  to  a  reasonable  gross  revenue  which 
means  adequate  compensation  for  the  aggregate  of  services  per- 
formed. 

4.  Very  low  rates  in  one  kind  of  traffic,  e.  g.  mail,  should  be 
offset  by  relatively  high  rates  on  other  traffic. 

The  fundamental  fallacy  in  the  application  of 
the  principle  to  the  case  in  hand,  however,  is  that 
Professor  Adams  has  utterly  neglected  to  consider 
whether  the  lowest  rates  or  lower  rates  than  those 
now  paid  are  "  essential  to  rendering  the  important 
service  undertaken  by  the  Postal  Department."  This 
goes  directly  to  the  heart  of  the  question  at  issue. 
The  theory  of  public  utility  has  no  favorite  services 
to  which  it  contributes  gratuities.  Correctly  applied, 
it  will  secure  from  each  service  rendered  bv  the  rail- 
ways  the  highest  amounts  which  can  be  paid  with- 
out preventing  the  transportation  of  any  traffic  which, 
from  the  viewpoint  of  the  economic  interests  of  so- 
ciety at  large,  it  is  desirable  to  have  moved.  These 
will,  at  the  same  time,  be  the  lowest  rates  which  the 
railways  can  afford  to  charge.  The  inquiry  which 
is  properly  made  in  aid  of  the  application  of  this 
principle,  when  the  reasonableness  of  any  rate  is 
questioned,  is  whether  the  rate  is  so  high  as  to  for- 
bid the  socially  desirable  transportation.  If  the  rate 
is  so  high  as  to  prevent  such  transportation  or  so  low 
as  to  encourage  socially  undesirable  transportation, 


THE    POSTAL    DEFICIT.  127 

it  i>  opposed  to  the  general  welfare  and  consequently 
obnoxious  to  the  principle  of  public  utility.  It 
should  be  understood  also  that  this  inquiry  will  not 
be  adequately  answered  in  any  ease  until  it  has  been 
learned  whether  the  transportation  alleged  to  be  de- 
sirable is  (impeded  by  anything  outside  of  the 
rate  charged  and  natural  economic  conditions.  If 
there  are  any  uneconomic  and  removable  restraints 
the  interests  of  society  in  general,  as  well  as  the 
rights  of  the  public  carriers,  demand  that  they  be 
eliminated  before  a  reduction  is  required.  The 
question  is,  therefore,  neither  complex  nor  very  diffi- 
cult in  practical  application  when  addressed  to  the 
mail  service.  This  is  the  form  it  should  take  at  the 
present  time : 

1.  Does  the  Postal  Department  adequately  serve 
the  public? 

2.  If  it  does  not.  is  the  difficulty  due  to  high  rail- 
way  charges  or  can  it  be  attributed  to  extravagant 
organization  or  to  other  causes? 

It  is  quite  possible  that  a  careful  examination  of 
the  facts  that  would  appear  in  reference  to  the  first 
inquiry  would  show  that  there  is  superfluous  mail 
transportation,  and  that  those  appearing  in  answer 
to  tie-  second, should  it  still  be  asked,  would  demon- 
strate that  more  efficient  organization,  more  rea- 
sonable salaries,  and  properly  adjusted  charge  - 
would  quickly  result  in  the  elimination  of  the 
present  deficit  and  the  substitution  of  a  considerable 
surplus. 


128  THE    POSTAL    DEFICIT. 

If,  however,  it  should  be  admitted,  as  it  is  assumed 
by  Professor  Adams,  without  even  the  most  perfunc- 
tory discussion,  that  the  present  railway  mail,  pay  is 
an  impediment  to  an  adequate  postal  service,  it  would 
still  be  necessary,  according  to  the  principles  that  he 
has  announced,  to  establish  one  of  three  things  be- 
fore a  reduction  could  be  considered  proper.  It  would 
have  to  be  shown  either : 

1.  That  the  aggregate  railway  revenue  is  excessive; 

2.  That  there  are  certain  charges  which  can  be 
raised  to  compensate  for  those  lowered ;  or, 

3.  That  the  reduced  rates  would  so  increase  busi- 
ness as  to  produce  greater  revenue. 

In  the  case  of  mail  business  the  third  possibility 
is  so  improbable  as  scarcely  to  merit  discussion. 
Professor  Adams  gave  no  attention  to  either  point, 
though  there  is  ample  evidence  that  the  theoretical 
necessity  was  not  unrecognized  by  him.  A  few  quota- 
tions from  his  report  will  show  that,  in  theory  at 
least,  he  appreciated  the  necessity  of  considering  the 
entire  schedule  of  railway  charges  in  connection  with 
the  problem  of  mail  pay.     He  said  : 

"The  principle  of  public  utility  enables  the  problem  of 
railway  mail  pay  to  be  treated  as  an  integral  part  of  the  gen- 
eral scheme  of  railway  rates.  Congress  may  properly  consider 
the  amount  given  to  railways  for  transporting  the  mail  as  one 
of  the  many  sources  from  which  the  carriers  draw  their  reve- 
nue, and,  holding  in  mind  the  social  value  of  the  service  as 
compared  with  the  other  services  rendered  by  railways,  can 
arrive  at  some  conclusion  as  to  the  relative  amount  that  ought 
to  be  allowed  for  this  service.  ...  To  cut  this  analysis 
short,  the  position  of  this  report  is  that  the  private  interest 
in  railway  charges  is  limited  to  the  claim  that  the  gross  rev- 


THE    POSTAL    DEFICIT.  129 

enno  of  railways  Bhould  be  adequate  to  cover  operating  ex- 
penses, fixed  charges,  and  a  fair  return  to  stockholders;  but 
this  sum  having  been  guaranteed,  tne  manner  in  which  this 

gross  amount  is  collected  from  the  shippers  is  a  matter  of  public 
policy  and  not  of  private  interest." 

The  foregoing  is  so  clearly  expressed  and  so  cath- 
olic in  sentiment  that  it  is  a  matter  of  deep  regret 
and  almost  supreme  surprise  to  find  its  author  delib- 
erately discussing  the  reduction  of  one  rate  upon 
alleged  grounds  of  public  utility  without  either  pre- 
senting evidence  that  the  lower  rates  would  hotter 
serve  the  general  welfare,  considering  the  relation  of 
the  present  income  to  total  operating  cost  and  capital 
invested,  or  offering  any  suggestions  as  to  means  of 
offsetting  the  reductions  which  he  proposes.  It  is  a 
curious  "guarantee"  of  a  "fair  return"  which  per- 
mits the  reduction  of  single  rates  without  any  refer- 
ence to  the  general  schedule.  On  another  page  of 
his  report  Professor  Adams  recognizes  the  necessity 
of  considering  the  results  of  the  entire  schedule  in 
the  most  explicit  terms,  as  follows : 

"It  is  believed  that  no  headway  can  be  made  toward  a  solu- 
tion of  the  problem  of  reasonable  railway  mail  compensation 
so  long  as  mail  traffic  and  railway  mail  revenue  is  considered 
independently  of  general  traffic  and  general  revenue." 

The  revised  text  of  Professor  Adams'  latest  ex- 
amination shows,  however,  that  lie  finally  begged 
the  entire  question  in  the  following  answer  to  a 
<  j  nest  ion  by  Mr.  Loud  : 

"Your questions  have  brought  out  the  important  fact  that 
the  adjustment  of  railway  mail  compensation  is  intimately  con- 
nected with  the  adjustment  of  railway  schedules  as  a  whole, 

and  that  the  rule  of  compensation   cannot  be  applied  to  any 


130  THE    POSTAL   DEFICIT. 

particular  service  considered  by  itself.  Further  questions  in 
this  direction  would  necessitate  a  general  discussion  of  the 
theory  of  railway  rates,  and  whatever  one  might  say  upon  so 
comprehensive  a  question  in  an  examination  of  this  sort  would 
probably  be  either  platitudes  or  statements  which  on  their  face 
would  be  absurd.  I  should  prefer,  except  the  Commission  see 
some  bearing  of  these  questions  other  than  that  which  has  al- 
ready been  brought  out,  to  refrain  from  expressing  myself  upon 
so  fundamental  a  problem  as  the  problem  of  railway  rates." 

Apparently,  it  is  impossible  to  reconcile  the  state- 
ment with  which  the  foregoing  begins  with  the  effort 
to  avoid  the  discussion  to  which  it  naturally  pointed 
with  which  it  closes.  Until  the  hiatus  in  the  dis- 
cussion of  railway  mail  compensation  from  the  point 
of  view  of  public  utility  is  supplied  by  a  careful 
examination  of  the  question  thus  indicated,  that 
principle  will  be  of  little  aid  in  the  determination  of 
reasonable  rates. 

"THE  PRINCIPLE  THAT  DENSITY  OF  TRAFFIC  ENABLES 

ECONOMIES." 

There  are  certain  industries,  in  which  the  propor- 
tion of  fixed  capital  is  large,  which  can  enlarge  their 
output  without  a  corresponding  increase  in  their  out- 
lav.  Such  industries  are  said  to  conform  to  the 
economic  law  of  increasing  returns,  which  means  that 
the  cost  of  production  per  unit  of  product  is  lower 
with  the  enlarged  output  than  when  the  quantity 
produced  was  less.  President  Hadley,  of  Yale  Uni- 
versity, has  contributed  a  most  useful  suggestion  in 
this  connection  by  calling  attention  to  the  fact,  in  a 
footnote  to  one  of  the  pages  of  his  "  Economics,"  that 
the  real  distinction  between  industries  in  this  respect 


THE    POSTAL   DEFICIT.  131 

is  based  on  the  extent  of  the  utilization  of  the  exist- 
ing fixed  capital.  Railways  constitute  one  of  the 
most  ready  examples  of  industries  which  conform  to 
the  law  of  increasing  returns.     The  outlay  required 

for  road-bed,  stations,  signaling  apparatus,  etc.,  does 
not  multiply  nearly  as  rapidly  as  traffic.  It  is  easy, 
however,  to  overstate  the  effect  of  this  law,  and  much 
harm  lias  been  accomplished  by  so  doing.  A  rail- 
way may  be  in  such  a  situation  that  an  increase  in 
certain  kinds  of  traffic  requiring  especial  facilities  or 
service  will  actually  raise  the  average  cost  of  render- 
in";  such  services.  Professor  Adams  expresses  his 
interpretation  of  the  law  of  increasing  return^  as 
applied  to  railway  transportation  in  what  he  terms— 

.  .  .  "the  business  law  of  transportation,  a  law  which 
asserts  that  the  cost  per  unit  of  transportation  decreases  as  the 
density  of  traffic  increases.  .  .  .  this  law  is  that  operat- 
ing expenses  do  not  grow  proportionally  with  an  increase  in 
traffic." 

Again,  it  is  desirable  to  introduce  a  series  of  quota- 
tions in  order  that  Professor  Adams'  application  of 
the  law  of  increasing  returns,  or,  as  he  has  called  it, 
the  "principle  that  density  of  traffic  enables  econ- 
omies/' to  the  problem  of  railway  mail  pay  may  be 
fully  apprehended. 

The  first  quotation  will  he  from  the  preliminary 
statement  made  to  the  Commission  by  Professor 
Adams  several  months  before  his  report  was  ren- 
dered.    He  said  at  that  time: 

"  The  possibility  of  introducing  economies  into  the  business 
of  transportation  depends  upon  the  increase  in  the  volume  of 

traffic,  from  which,  in  the  absence  of  countervailing  consider- 


132  THE    POSTAL    DEFICIT. 

ations,  it  follows  that  a  form  of  traffic  which  increases  most 
rapidly  through  a  series  of  years  should  show  a  relatively  more 
rapid  decrease  in  charges  as  compared  with  other  traffic!" 

The  following  are  from  the  final  report : 

"  The  significance  of  the  increase  in  the  volume  of  traffic  is 
that  it  enables  an  introduction  of  economies  and  a  consequent 
decrease  in  the  cost  of  rendering  the  service." 

"The  conclusion  from  this  law  was  that  the  traffic  which 
contributes  most  to  an  increase  in  density  ought,  other  things 
being  equal,  to  show  the  greatest  reduction  in  rates." 

"If  there  be  any  virtue  in  the  rule  that  economy  of  transpor- 
tation depends  upon  density  of  traffic,  it  is  evident  that  mail 
traffic  ought  to  show  a  greater  relative  saving  than  either 
freight  traffic  or  passenger  traffic." 

In  another  place,  in  the  same  report,  after  introduc- 
ing a  statement  which  shows  the  relative  increases 
since  1881  in  mail,  passenger,  and  freight  transpor- 
tation, Professor  Adams  says : 

"  The  statement  justifies  the  general  reduction  in  rates  dur- 
ing the  past  eighteen  years,  for  it  shows  such  a  reduction  to 
have  been  possible  on  account  of  the  economies  introduced  in 
the  business  of  transportation.  It  also  justifies,  in  the  absence 
of  countervailing  consideration,  a  much  greater  relative  reduc- 
tion of  mail  rates  than  of  passenger  or  freight  rates." 

No  one  who  gives  even  the  most  cursory  attention 
to  the  foregoing  will  fail  to  appreciate  the  fact  that 
the  possibility  of  introducing  economies  as  traffic 
increases  is 'the  essential  element  in  the  law.  If  there 
is  no  such  possibility,  if  traffic  at  the  beginning  of 
the  period  under  observation  had  reached  the  point 
at  which  the  highest  practicable  economy  can  be 
attained,  no  conceivable  increase  in  density  could 
operate  so  as  to  produce  a  presumption  in  favor  of 
lower  rates.  That  the  important  place  in  the  theory 
here  assigned  to  the  coexistence  of  potential  econo- 


THE    POSTAL   DEFICIT.  133 

mies  with  increasing  traffic  is  a  fair  statement  of 
Professor  Adams'  position  will  be  made  more  evi- 
dent by  the  following  extract  from  his  report: 

"  Whether  or  not  this  great  increase  in  ton-mileage  warrants 
the  increase  in  pay  from  16,522,725  to  $34,273,431  depend- 
entirely  upon  the  degree  of  economy  that  may  be  introduced 
into  the  service  on  account  of  this  increased  density  of  traffic." 

Yetj  in  spite  of  the  paramount  importance  of  this 

aspect  of  the  development  of  railway  mail  service, 
according  to  the  theory  which  he  advocates,  Pro- 
fessor Adams'  report  will  be  searched  in  vain  for  any 
evidence  that  the  great  increase  in  ton-mileage  of 
mail  which  has  taken  place  has  been  accompanied 
by  even  the  smallest  economies  in  its  transportation. 
If  such  economies  have  been  effected  it  should  be 
possible  to  point  out  when  and  where  they  occurred. 
In  freight  transportation  one  can  explain  the  fact 
that  railways  can  carry  traffic  at  from  five  mills  to 
one  cent  per  ton  per  mile  and  remain  solvent  by 
reference  to  larger  cars,  more  powerful  locomotives, 
increased  tonnage  per  train,  and  other  very  salient 
improvements.  What  similarly  money-saving  im- 
provements have  been  applied  to  the  transportation 
of  mail?  It  is  submitted  that  thev  have  not  been 
pointed  out,  and  that  they  will  not  be  pointed  out. 
Thev  do  not  exist.  I  )n  the  contrary,  the  whole 
history  of  the  railway  mail  service  since  the  intro- 
duction of  postal  and  compartment  ears  shows  pro- 
gressively greater  demands  upon  the  railways  for 
facilities.  The  data  now  available,  which  it  must  be 
admitted  are  in  many  respects  far  from  satisfactory, 


134  THE    POSTAL    DEFICIT. 

indicate,  not  only  that  the  point  where  increasing 
traffic  ceases  to  "  enable  economies"  was  reached  on 
most  railways  several  decades  ago,  but  that,  under 
the  current  demands  of  the  Post-office  Department, 
the  normal  increase  in  traffic  does  not  affect  com- 
pensation sufficiently  to  keep  the  latter  in  perma- 
nent relation  with  the  development  of  more  costly 
methods.  Professor  Adams  himself  suggests  an  inci- 
dent of  the  law  of  increasing  returns  that  may  warn 
the  thoughtful  that  the  limits  of  economy  may  have 
been  reached  at  a  comparatively  early  date  in  the 
development  of  mail  transportation  by  rail.  He 
declares : 

"  The  above  does  not  complete  this  fundamental  law  of  trans- 
portation. Not  only  does  increase  in  the  volume  of  traffic  tend 
to  reduce  relative  cost,  but  the  effect  of  increased  traffic  in  re- 
ducing cost  is  relatively  more  intense  for  a  road  whose  traffic  is 
sparse  than  for  a  road  whose  traffic  is  dense." 

The  foregoing  is  in  accord  with  the  true  theory  of 
the  relation  of  the  returns  of  industry  to  the  capital 
and  labor  employed — that  is,  that  all  industries  pass 
or  may  pass  through  successive  states  in  which  they 
conform,  first,  to  the  law  of  increasing  returns;  sec- 
ond, to  the  law  of  constant  returns,  and,  third,  to  the 
law  of  decreasing  returns.  The  fact  of  conformity  to 
these  laws  is  a  technical  one,  and  is  dependent  upon 
the  degree  of  development  attained  in  the  particular 
industry  considered.  The  regularity  of  the  succes- 
sion can  be  interrupted  by  the  development  of  new 
methods.  For  example,  agriculture,  which  is  usually 
regarded  as  the  best  example  of  an  industry  subject 


THE    POSTAL    DEFICIT.  136 

to  decreasing  returns,  may  be  brought  into  temporary 
conformity  with  the  law  of  increasing  returns  by  the 
adoption  of  intensive  methods.  Unless  the  methods 
of  a  particular  industry  are  so  modified  as  practically 
to  substitute  a  new  one,  as  in  the  substitution  of  the 
factory  system  for  that  of  household  industry  in  tex- 
tile  manufactures,  the  states  of  conformity  to  any  rule 
except  that  of  diminishing  returns,  must  be  consid- 
ered as  temporary.  This  statement  requires  thequal- 
ification,  however,  that  some  industries  may  supply 
the  entire  effective  demand  while  remaining  in  the 
earlier  states,  and  that  the  incentive  to  development 
beyond  those  states  may  thus  he  lacking.  Such  in- 
dustries  may  appear  to  be  continuously  subject  to  the 
law  of  increasing  return-. 

The  purpose  of  this  digression  into  economic  theory 
is  to  throw  light  upon  the  passage  last  quoted.  It 
dearly  contemplates  just  such  a  progress  as  lias  been 
described,  for  if  it  be  true  that  "  the  effect  of  increased 
traffic  is  relatively  more  intense  for  a  road  whose  traffic 
is  sparse  than  for  a  road  whose  traffic  is  dense,"  it 
follows  that  the  decrease  in  intensity  may  proceed  to 
the  point  where  it  is  zero,  and  that  beyond  that  point 
it  would  become  negative — that  is,  increase  of  traffic 
might  proceed  until  it  required  extra  facilities  to  an 
extent  that  would  increase  the  quotient  of  expense 
divided  by  volume.  This  may  be  regarded  a-  ex- 
tremely  unlikely  to  result  from  any  probable  in- 
crease iu  any  kind  of  railway  traffic, but  long  before 
it  could  happen  the  economy  from  increasing  traffic 
would    be  negligible.      This  "  fundamental   law  of 


136  THE    POSTAL    DEFICIT. 

transportation  "  is,  therefore,  a  temporary  law,  apply- 
ing only  under  certain  conditions  and  subject  to  very 
definite  limitations.  There  is  evidence  that  it  has 
very  little  effect  upon  passenger  traffic  at  the  present 
time,  if  the  railways  of  the  United  States  are  consid- 
ered as  a  single  system,  though  it  still  applies  with 
considerable  force  in  freight  transportation.  Profes- 
sor Adams  has  not  shown  that  it  still  applies  to  mail 
transportation,  and  when  the  effect  of  constantly  in- 
creasing requirements,  of  methods  substantially  rev- 
olutionized within  three  decades,  is  added,  there  is 
reasonable  ground  for  refusing  to  believe  that  it 
does. 

It  has  been  asserted  that  Professor  Adams  has 
made  no  effort  to  show  that  increasing  mail  traffic 
has  been  accompanied  by  economies.  In  order  that 
there  may  be  no  misunderstanding  it  should  be 
added  that  the  fact  that  he  has  made  occasional  allu- 
sion to  higher  average  car-loads  of  mail  on  certain 
routes  than  in  the  country  at  large  has  not  been 
overlooked.  Examination  will  show,  however,  that 
these  allusions  were  invariably  introduced  in  order 
to  throw  light  upon  the  relative  situation  of  different 
routes,  and  that  there  was  no  effort  to  show  that 
these  averages  are  higher  now  than  in  the  past. 
Throughout  the  entire  discussion  Professor  Adams 
depended  wholly  upon  the  assumption  that  there 
must  have  been  economies,  because  ton-mileage  had 
increased.  That  this  portion  of  his  argument  is 
wholly  dependent  upon  the  existence  of  such  a  pre- 
sumption was  acknowledged  in  the  following  words 


THK    POSTAL    DEFICIT.  137 

which  an-  quoted    from    his   revised    testimony  of 

April  7.  11)00: 

"...  it  may  be  added  that  the  railway  representatives 
do  not  appear  adequately  to  appreciate  the  significance  of  the 
tremendous  increase  in  mail  traffic  since  1870.  Many  of  them 
assert,  by  implication  at  least,  that  we  have  come  to  a  point  in 
the  development  of  mail  traffic  when  it  is  impossible  to  further 
decrease  cost  as  the  result  of  increase  in  mail  traffic.  This  im- 
plication is  at  least  questionable;  indeed,  it  must  be  conceded 
that  if  this  be  a  correct  statement  of  the  case  the  entire  argu- 
ment of  my  report  is  incorrect." 

REDUCTIONS     RECOMMENDED     BY     PROFESSOR     ADAM-. 

At  the  commencement  of  this  examination  of  the 
report  rendered  by  Professor  Adams  to  the  Joint  Postal 
Commission  allusion  was  made  to  certain  internal 
evidences  that  he  did  not  approach  the  investigation 
•  in  a  spirit  of  complete  open-mindedness,  but  had  pre- 
judged the  case,  or  at  least  his  relation  to  it,  so  far  as 
to  believe  that  it  was  his  dnty  to  find  a  means  of  re- 
ducing railway  pay.     It  is  not  surprising  that  while 
in  this  attitude  of  mind,  and  after  reaching  the  con- 
clusions concerning  the  application  to  railway  mail 
pay  of  certain  sound  and  generally  recognized   eco- 
nomic principles,  conclusions  that  it  has  been  neces- 
sary in  this  paper  to  criticise  adversely,  he  should 
have  found  in  the  prosperity  which  has  come  to  the 
railway  industry  in  common  with  all  other  indus- 
trios  of  the  country  an  additional  justification  for 
the  reduction  of  mail  pay.     He  presented  this  idea 
to  the  ( 'oiimiission  as  follows  : 

"  It   ie  absolutely  certain,  in  view  of  the  current  earnings  of 
railways  and  of  the  large  increase  in  the  sums  contributed  to 

10 


138  THE   POSTAL   DEFICIT. 

gross  earnings  in  payment  for  passenger  services  and  freight 
services,  that  a  moderate  decrease  in  the  amount  contributed 
by  the  Government  for  transporting  mail  would  have  no  in- 
jurious effect  upon  the  value  of  railway  property 
the  Government  is  justified  in  presenting  its  claim  to  a  participa- 
tion in  the  benefits  conferred  upon  the  railways  by  a  return  of 
prosperity.  .  .  .  The  only  form  the  benefit  can  take  is 
that  of  a  reduction  in  the  rate  of  pay." 

It  is  noticeable  that  the  idea  of  recoupment  from 
less  important  services  is  not  present  in  the  forego- 
ing extract.  In  fact  it  suggests,  while  of  course  it 
does  not  parallel,  the  easy  nonchalance  with  which 
Mr.  Acker  turned  aside  an  inquiry  as  to  the  effect  of 
his  proposed  reduction  of  25  -per  cent  of  present 
mail  pay. 

Mr.  Acker  said : 

"  In  answering  that  question  I  will  simply  remind  you  that 
the  percentage  which  the  postal  revenues  figure  in  the  rail-  > 
road  revenue — I  think  it  is  about  3  per  cent — is  so  small  that  a 
change  of  25  per  cent  could  hardly  affect  either  the  freight  rates 
or  passenger  rates  of  any  road  that  I  have  any  knowledge  of. 
The  item  would  be  too  small  to  cut  any  figure." 

In  spite  of  the  preconceived  idea  that  it  was  his 
duty  to  report  in  favor  of  a  reduction  that  would,  in 
effect,  constitute  a  material  "  contribution  "  from  the 
railways  toward  the  elimination  of  the  current  postal 
deficit,  Professor  Adams  has  given  evidence  that  his 
confidence  in  the  propriety  of  his  recommendations 
is  not  complete.  While  before  the  Joint  Postal  Com- 
mission, on  April  7, 1900,  some  time  after  the  presen- 
tation of  his  report,  he  admitted  that  there  was  an 
apparent  inconsistenc}r  in  his  conclusions,  though  he 
tried  to  show  that  it  was  not  real.  At  that  time  he 
said  to  the  Commission  : 


THE    POSTAL    DEFICIT.  139 

•  Still,  there  ia  an  apparent  inconsistency  there  in  recom- 
mendinga  reduction  and  in  recommending  a  further  investiga- 
tion, because  my  recommendation  does  include  all  routes.  I  am 
perfectly  willing,  if  the  Commission  thinks  clearly  to  adopt 
either  dilemma,  to  bringing  this  report  to  a  conclusion,  to  drop 
from  my  report  the  recommendation  of  reduction  of  pay  and 
retain  the  recommendation  for  further  investigation." 

The  foregoing  was  entirely  omitted  from  the  re- 
vised  testimony;  but,  as  both  the  original  and  tin- 
revision  have  been  published  by  the  Government,  it 
is  still  available,,  and,  with  the  discussion  which  ac- 
companied it.  continues  to  throw  light  upon  the  rec- 
ommendations which  it  was  finally  decided  to  in- 
clude. 

The  reductions  recommended  include  a  horizontal 
reduction  of  5  per  cent  to  be  applied  to  all  routes 
and  certain  specific  reductions,  upon  a  graduated 
scale,  to  be  applied,  in  addition,  to  the  routes  already 
receiving  the  lower  rates  of  compensation.  Professor 
Adams'  report  contains  exactly  forty-three  words 
in  regard  to  the  5  per  cent  horizontal  reduction, 
which,  if  adopted,  would  have  the  effect  of  reducing 
the  present  compensation  by  about  one  and  three- 
quarters  millions  of  dollars.  <  >nly  twenty  of  these 
words  are  in  the  body  of  the  report  and  are  as  fol- 
lows : 

11  First.  It  is  proposed  that  the  present  rate  of  compensation 
on  all  routes  shall  be  reduced  by  5  per  cent." 

There  was  no  further  allusion  to  the  proposed 
horizontal  reduction  in  the  report  as  originally  sub- 
mitted, but  after  the  examinatioD  of  April  7.  1900, 
in  which  this  recommendation  was  discussed  in  such 


140  THE   POSTAL   DEFICIT. 

a  way  as  to  bring  out  its  absolute  independence  of  the 
processes  of  reasoning  concerning  mail  pay  embodied 
in  the  report,  a  footnote  of  twenty-three  words  was 
added,  which  reads  as  follows : 

"  This  suggestion  is  justified  by  a  consideration  of  the  econo- 
mies in  railway  transportation  not  dependent  on  increase  in 
the  density  of  mail  traffic." 

It  will  be  observed  that  if  these  forty-three  words 
shall  be  accepted  at  their  face  value  by  the  Joint 
Postal  Commission  and  by  Congress,  they  will  cost 
the  railways  something  more  than  forty  thousand 
dollars  apiece.  That  is  rather  higher  than  the  usual 
rate  of  payment  for  contributions  to  statistical  and 
economic  literature. 

That  so  important  a  proposition  should  have  been 
so  lightly  treated  is  scarcely  explicable,  and  in  order 
that  there  may  be  no  doubt  concerning  the  matter 
or  suspicion  of  oversight,  the  following  frank  admis- 
sion from  Professor  Adams'  revision  of  his  testimony 
of  April  7,  1900,  is  quoted  : 

"  I  must  confess  that  the  report  is  incomplete  at  this  point. 
It  contains  no  explanation  of  the  reasons  for  advocating  a  hori- 
zontal reduction  of  5  per  cent  in  addition  to  the  differential 
reduction  on  the  dense  routes." 

On  April  7,  1900,  Professor  Adams  declared,  in  ex- 
planation of  the  fact  that  the  recommendation  of  a 
5  per  cent  reduction  had  been  applied  to  all  routes, 
while  he  had  previously  limited  his  conclusions  in 
regard  to  overpayment  to  routes  carrying  30.000 
pounds  and  upward  per  day,  that — 

"  The  justification  of  it  is  that  you  get  such  a  very  large  per- 
centage of  your  mail  over  30,000  pounds." 


THE    POSTAL    DEFICIT.  141 

l 

The  foregoing  disappeared  during  the  revision  of 
this  testimony  and  the  following  appeared   in   its 

stead  : 

"  The  justification  <>f  the  horizontal  reduction — th:it  is  to  say, 
a  reduction  which  affects  all  routes  under  all  conditions  and  in 
all  parts  of  the  country — is  found  in  the  fact  that  the  railways 
of  the  country  during  the  last  quarter  of  a  century  have  heen 
benefited  by  improved  methods  of  manufacture  and  changes  in 
the  price  of  equipment  and  supplies  quite  independently  of  the 
economies  introduced  as  the  result  of  increased  traffic. 
In  order  that  the  Government  might  secure  advantage  from 
this  form  of  economy  I  recommended  a  horizontal  reduction 
upon  all  routes." 

If  this  "justification'1  had  not  been  formulated 
after  the  recommendation  to  which  it  was  applied, 
which  is  palpably  the  case,  as  the  report  bears  date 
as  of  February  1, 1900,  while  the  explanation  finally 
given  was  clearly  not  in  the  mind  of  its  author  as 
late  as  April  7,  1900,  the  fact  that  it  is  in  radical 
contradiction  to  the  balance  of  his  argument  and 
proposals  could  not  have  escaped  his  attention.  He 
has  expressly  stated  that — 

"  The  law  of  1873  is  drawn  in  harmony  with  the  fundamental 
law  of  transportation,  namely,  that  volume  of  traffic  renders 
economy  possible.  .  .  .  This  consideration  is  recognized 
.     .     .     hy  specific  reductions  in  the  rate  of  payment."     .     .    . 

and  that  there  is  a — 

"  constant  reduction  no  matter  how  large  the  quantity  of  mail 
carried." 

He  has  also  specifically  shown  that  under  the  law 
the  average  mail  payment  per  ton  per  mile  has  been 
reduced  from  20.420  cents  in  1898  to  12.507  cents  in 
1898.     It  is  submitted  that  this  reduction  secures  to 


142  THE    POSTAL    DEFICIT. 

the  Government  all  of  its  due  proportion  of  the  bene- 
fits derived  by  the  railways  from  "  improved  methods 
of  manufacture  and  changes  in  the  price  of  equip- 
ment and  supplies." 

An  additional  quotation  from  the  examination  of 
April  7, 1900,  which  was  also  omitted  in  the  revision, 
will  nearly  complete  the  evidence  in  regard  to  the 
easy  independence  of  logical  foundation  which  char- 
acterized the  introduction  of  this  recommendation. 
The  following  is  from  page  418  of  Part  II  of  the 
published  testimony : 

''Professor  Adams:  I  have  not  investigated  the  effect  of  a  5 
per  cent  reduction  upon  the  small  routes — those  that  receive  in 
excess  of  60  cents  per  ton  per  mile. 

"Mr.  Loud:  And,  as  a  matter  of  fact,  it  might  all  be  eaten 
up  by  mail  messenger  service,  might  it  not  ? 

"  Professor  Adams  :  Possibly  ;  yes,  sir.  I  have  not  investi- 
gated that." 

The  specific  reductions  proposed  by  Professor 
Adams  are  contained  in  the  following  extract  from 
his  report: 

"  Second.  It  is  proposed  that  all  routes  receiving  in  excess  of 
20  cents  per  ton  per  mile  shall  be  subjected  to  a  further  reduc- 
tion at  a  uniformly  progressing  rate,  the  rate  of  progression 
being  indicated  in  the  following  table  : 


THE   TOSTAL    DEFICIT. 


1  13 


8<  HEME    FOR    PB06RBS8IVB    RKIH'CTION    OF    RAILWAY  MAT  I,    FAY. 


Classification  of  roads  on  the  basis  of  rates  received 
under  the  present  laws  by  which  railway  com- 
pensation is  determined  (cents  per  ton  per  mile). 


16.50  to  20... 
14  to  16. 50... 
12.30  to  14  .  . 
11.25  to  12.30 
10  to  11. 25... 
9.20  to  10..  . 
8.80  to  9.20.. 
8.40  to  8.80.. 
8.10  to  8.40.. 
7.67  to  8.10.. 
7.34  to  7.67.. 
7  to  7. 34 


Percentage 
of  reduc- 
tion a  p  - 
plying  to 
each  class 
of  roads 
in  ad  d  i- 
tion  to  a 
unif  o  r  m 
reduction 
of  5  per 
cent. 


Per  cent. 

1 
o 

3 
4 
5 
H 

7 

8 

9 
10 
11 
12 


The  foregoing  was  substituted  for  a  differential 
-  ile  of  reduction  which  was  proposed  to  the  Com- 
mission by  Professor  Adams  on  November  23,  1899. 
The  earlier  proposal  included  routes  receiving  up  to 
sixty  cents  per  ton  per  mile,  while,  as  will  be  seen. 
the  later  specific  reductions  apply  to  routes  receiving 
not  more  than  twenty  cents  per  ton  per  mile.  As  the 
earlier  proposal  involved  a  reduction  of  about  ten 
per  cent,  and  the  later  about  half  as  much,  the  pos- 
sibility   that    Professor    Axlams'    confidence   in   the 


144  THE    POSTAL    DEFICIT. 

applicability  of  the  "  principle  that  density  of  traffic 
enables  economies  "  to  railway  mail  service  decreased 
50  per  cent  between  the  end  of  November  and  the 
beginning  of  February  is  naturally  suggested. 

These  specific  reductions  are  wholly  dependent 
upon  the  principle  just  referred  to,  and  as  its  limita- 
tions have  already  been  discussed,  and  the  lack  of 
any  evidence  that  the  economies  suggested  have  ac- 
tually taken  place  has  already  been  made  apparent, 
little  further  comment  is  required.  Possibly  Profes- 
sor Adams'  own  appreciation  of  the  fact  that  this 
recommendation  is  absolutely  dependent  upon  the 
existence  of  economies  with  regard  to  which  he  intro- 
duced no  evidence  can  yet  be  made  clearer.  In  his 
preliminary  statement  at  New  York  he  said  : 

"  My  point  is  this:  Unless  the  Post-office  Department  can 
avail  itself  of  a  dense  traffic  of  150  tons  per  mile  per  dav,  to 
introduce  economies  in  the  dispatch  of  mail  beyond  what  is 
indicated  by  an  average  load  of  2  tons  of  mail  per  car,  I  do  not 
see  how  Congress  can  justly  reduce  the  rate." 

Four  and  one-half  months  later,  after  submitting 

his  report,  he  said  : 

• 

"  You  must  understand  that  this  report  is  written  from  the 
point  of  view  of  the  testimony  that  has  been  given  here,  and 
conscious  of  the  fact  that  the  argument  against  reduction  would 
be  rested  upon  the  fact  that  the  average  load  in  a  postal  car  is 
only  2  tons— if  it  is  only  2  tons— and  if  you  cannot  make  it 
more  than  2  tons,  then  the  overpay,  if  there  is  overpay,  lies  on 
those  routes  where,  as  a  matter  of  fact,  they  do  have  an  excess 
of  2  tons  ;  but  I  was  disinclined  to  accept  what  the  Post-office 
Department  seems  to  accept,  and  many  of  the  witnesses  assert 
that  it  is  impossible  to  load  cars  beyond  an  average  of  2  tons. 
Now,  I  may  be  wrong  there.  .  ."  .  Two  is  what  the  evi- 
dence asserts.  Now,  I  may  be  wrong  there;  but  my  recom- 
mendation for  reduction  is  that  in  case  we  do  have  3£  or  4  or  5, 
if  those  routes  exist,  that  they  are  getting  too  high  pay  now, 
and  therefore  you  could  now,  under  existing  law,  at  present 
reduce  the  rate." 


THE    POSTAL    DEFICIT.  145 

At  the  later  hearing  the  following  questions  and 
answers  were  given: 

"Mr.  Loud:  Still,  subsequent  investigation  might  entirely 
change  your  conclusions— that  is,  such  is  possible,  is  it  not? 

"Professor  Vdams:  Yes,  sir:  I  admit  that.  I  admit  that  if 
it  be  proved  that  it  is  not  possible  to  introduce  any  greater 
economies  in  the  Railway  Mail  Service  than  now  exist,  my 
conclusions  are  false. 

••  Mr.  Catchings:  All  of  them  ? 

"Professor  Adams:  My  chief  conclusion  as.  to   reduction  of 

pay." 

FURTHER      INVESTIGATION      RECOMMENDED      BY     PRO- 
FESSOR   ADAMS. 

Study  of  tin-  recommendations  in  regard  to  railway 
mail  compensation  has  shown  that  they  were  based 
upon  assumptions  which  cannot  be  admitted,  on 
principles  erroneously  applied,  and  upon  allegations 
of  fact  with  regard  to  which  their  author  admits 
that  there  is- no  proof.  Though  introducing  these 
recommendations  for  reductions,  it  has  been  shown 
that  Professor  Adams  at  one  time  offered  to  with- 
draw them,  ami  it  will  now  appear  that  he  accom- 
panied them  by  recommendations  for  further  inves- 
tigation that  completely  nullify  any  force  they  might 
otherwise  have  retained. 

Professor  Adams  suggested  live  heads  of  inquiry 
for  further  investigation,  and  the  very  first  of  these 
throws  such  doubt  upon  the  proposal  for  reductions 
upon  the  denser  route-  that  it  would  have  to  be  held 
in  abeyance  pending  investigation  were  there  no 
other  reason  for  refusing  to -accept  it.  This  sugges- 
tion hegins  by  asking  for: 


146  THE   POSTAL   DEFICIT. 

'■  Such  a  classification  and  compilation  relative  to  trains  carry- 
ing mail  that  the  persistent  error  which  lurks  in  the  phrases 
1  average  load '  and  '  average  number  of  cars  in  train  '  can  be 
set  aside. 

and  it  ends  with  this  significant  fundamental  admis- 
sion : 

"It  must  be  admitted  that  the  proposed  reduction  of  com- 
pensation submitted  by  this  report  rests,  in  part,  upon  an  as- 
sumed '  average  load '  respecting  which  there  is  no  absolute 
certainty." 

Two  other  suggestions  indicate  that  Professor 
Adams  did  not  entirely  overlook  the  fact  that  before 
insisting  upon  reductions  in  railway  mail  pay  upon 
the  ground  of  "  public  utility  "  the  Post-office  Depart- 
ment must  be  purged  of  extravagant  methods. 
These  recommendations  will  also  be  quoted  in  full : 

"Such  a  description  of  postal-train  service  in  selected  dis- 
tricts as  to  warrant  a  conclusion  respecting  extravagance  or 
economy  of  the  railway-mail  service. 

"  Such  an  investigation  into  the  methods  of  appointment,  ten- 
ure of  office,  and  rate  of  payment  of  postmasters  and  post-office 
employes  as  will  disclose  the  fact  of  extravagance  outside  of 
the  Railway  Mail  Service  if  such  extravagance  exist." 

All  of  the  data  indicated  by  these  suggestions  are 
important,  and  their  collection  would  materially  aid 
in  determining  how  the  postal  service  can  be  im- 
proved. They  might  also  show  whether  the  deficit 
can  be  eliminated  without  resorting  to  means  that 
would  either  operate  unjustly  toward  a  portion  of 
the  public  or  materially  impair  the  public  utility  of 
the  services  rendered  by  the  Department. 


THE    POSTAL    DEFICIT.  147 


GENERAL    REVIEW    OF    PROFESSOB    A  DA  Ms'    REPORT. 

Summarizing  what  lias  already  been  observed  con- 
cerning  Professor  Adams'  report  and  testimony  as 
expert  to  the  Joint  Postal  Commission,  it  must  be 
said  that  it  has  been  found  to  be  vitiated  by  the  bias 
with  which  he  undertook  and  pursued  the  work.  In 
spite,  therefore,  of  his  unquestionably  great  ability, 
his  long  experience  as  a  statistician,  and  his  high 
reputation  as  an  economist,  he  has  not  very  mate- 
rially advanced  the  solution  of  the  present  problem. 
The  data  which  he  collected  have  sufficed  to  estab- 
lish, with  much  greater  definiteness  than  was  for- 
merly the  case,  some  of  the  paramount  conditions  of 
the  E  ail  way  Mail  Service,  but  even  in  this  respect  his 
work  has  not  risen  to  the  height  of  its  possibilities. 
The  comparisons  in  which  he  attempted  to  throw 
light  upon  the  relation  of  mail  pay  to  freight  rates 
and  express  pay  were  among  incomparable  data  and 
so  misleading  as  to  be  worse  than  valueless.  The 
other  attempt  to  investigate,  inductively,  the  reason- 
ableness of  present  mail  rates  will  find  its  highest 
utility  as  an  illustration  of  the  baneful  and  deceptive 
possibilities  of  the  mathematical  average. 

Passing  to  the  general  principles  announced,  it  has 
been  shown  that,  although  usually  sound  in  his 
broader  generalizations,  the  attempts  to  apply  them 
to  the  present  problem  were  often  fundamentally 
erroneous.  The  principle  that  density  of  traffic  en- 
ables economies,  which  the  present  writer  has  pre- 


148  THE    POSTAL    DEFICIT. 

ferred  to  designate'  in  accordance  with  ordinary 
economic  terminology  as  the  law  of  increasing  re- 
turns, was  overstated  at  the  outset,  and  yet  if  the 
statement  should  be  fully  accepted  no  demonstration 
of  its  applicability  to  the  present  situation  would  ap- 
pear. 

In  conclusion,  it  was  found  that  one  recommenda- 
tion calling  for  a  deduction  from  railway  earnings  of 
about  $1,750,000  was  made  without  the  formality  of 
presenting  any  reasons,  and  that  the  only  "justifica- 
tion "  ever  suggested  by  its  author  was  an  after- 
thought, brought  forward  in  consequence  of  adverse 
criticism,  more  than  two  months  after  the  report  was 
rendered.  The  other  recommendation  favoring  ad- 
ditional differential  reductions  was  in  accordance 
with  the  supposed  law  of  density,  the  applicability 
of  which  had  not  been  shown.  According  to  the 
frank  admission  of  its  author,  it  was  based  upon  an 
assumption,  with  regard  to  which  there  is  no  abso- 
lute certainty,  and  can  be  none,  until  the  facts  have 
received  much  further  study.  Finally,  the  report 
concluded  with  a  series  of  suggestions  which  clearly 
indicate  that  the  facts  which  are  required  for  a  satis- 
factory study  of  railway  mail  pay  were  not,  in  Pro- 
fessor Adams'  opinion,  available  when  he  made  his 
report. 


THE    POSTAL    DEFICIT. 


SUMMARY 


149 


The  results  of  the  investigation  conducted  by  the 
Joint  Postal  Commission  afford  a  great  deal  of  addi- 
tional information  concerning  the  conditions  of  the 
Railway  Mail  Service.     It   has  been  the  purpose  of 
this  paper  to  arrange  some  of  this  information  in 
such  a  way  as  to  indicate  as  nearly  as  possible  the 
nature  of  the  problems  presented.    It  will  be  obvious 
to  those   who  have   followed   the   discussion  herein 
that  the  data  necessary  for  a  complete  description  of 
this  service   are  not   yet   available,  and  that  much 
more  in  the  way  of  investigation  can  sjtill  be  under- 
taken with  profit.     It  will  appear,  however,  if  it  has 
not  already  done  so,  that  so  far  as  the   data   now- 
available  can  point  to  any  conclusion  they  clearly 
indicate  that  the  present  rates  of  railway  mail  pay 
are   not  excessive.     This    conclusion  is  believed  to 
apply  with  especial  force  to  those  routes  on  which 
the    requirements  in    regard   to    compartment    and 
postal  car  service  are  greatest. 

GENERAL    CONCLUSIONS    CONCERNING     RAILWAY    MAIL 

PAY. 

This  work  lias  already  considered  the  services 
rendered  by  railways  in  mail  transportation,  and  the 
tact  that  constantly  increasing  demands  for  space 

and  facilities  are  made  by  the  Department  has  been 
established  by  the  most  ample  and  indisputable 
evidence.     It   has   also    been  shown  that   the   rates 


150  THE    POSTAL    DEFICIT. 

charged  for  these  services  have  steadily  declined 
and  that  the  extent  of  the  decrease  within  the  last 
three  decades  has  been  much  greater  than  in  passen- 
ger rates  and  but  slightly  less  than  in  freight  rates. 
Where  the  comparisons  could  be  applied  to  particu- 
lar routes  the  decline  in  mail  rates  has  been  greatest 
of  all.  In  the  discussion  of  Professor  Adams'  report 
it  appeared  that  if  the  comparison  was  made 
between  the  data  for  the  respective  services  that 
are  most  nearly  comparable  the  railway  receives 
almost  as  much  per  ton  per  mile  for  -carrying 
traffic  for  the  express  companies  as  for  the  serv- 
ices rendered  in  carrying  mail.  The  latter  com- 
parison was  'hardly  satisfactory,  for  while  it  was 
possible  to  determine  just  what  the  Post-office  De- 
partment pays,  the  special  services  rendered  to  the 
railways  by  the  express  companies,  which  plainly 
constitute  a  part  of  the  payment  accorded,  had  to  be 
estimated  for,  and  the  allowance  was  necessarily  a 
minimum  one.  So  far  as  the  comparison  between 
express  and  mail  pay  has  any  value,  it  can,  therefore, 
be  postulated,  with  perfect  safety,  that  the  difference 
is  little,  if  any,  and  of  no  especial  significance.  It  is 
difficult,  however,  to  attach  any  verv  material  im- 
portance  to  this  comparison.  The  difference  between 
the  services  rendered  to  the  express  company  and 
those  supplied  to  the  Department  is  fundamental. 
Were  the  actual  rates  paid  by  express  companies,  in- 
cluding the  value  of  the  services  which  they  perform 
for  the  railway,  known,  it  might  be  possible  to  add 
arbitrary  amounts  for  each  element  of  superiority  in 


THK    POSTAL    DEFICIT.  L51 

the  Railway  Mail  Service,  and  thus  arrive  at  an 
amount  which  could  be  supported  with  very  plaus- 
ible arguments  as  constituting  reasonable  compensa- 
tion for  mail  transportation.  This  amount  would 
inevitably  It  much  higher  than  the  present  payment. 
and  while  it  might  happen  to  approximate  a  reason- 
able return  for  the  services  required,  the  method  is 
an  unsound  one. 

The  limitations  of  the  principle  that  payments 
shall  he  adjusted  to  cost  which  prevent  its  applica- 
tion to  specific  railway  services,  whether  rendered  in 
carrying  mail  or  other  traffic,  have  already  been  fully 
explained.  The  aggregate  cost  of  all  of  the  trans- 
portation services  rendered  by  railways  can  be  ascer- 
tained, and  the  public  is  bound,  not  only  in  order 
that  justice  may  he  served,  but  in  the  interest  of 
travelers  and  shippers,  to  see  that  this  sum,  together 
with  a  reasonable  profit,  is  returned  in  payment  for 
those  services.  The  railways  have  no  interest  in  the 
relative  adjustment  as  between  different  services  of 
the  payments  which  make  up  this  aggregate  return 
except  that  which  they  share  with  the  general 
public.  This  interest  i<  fully  expressed  in  the  state- 
ment that  the  adjustment  must  be  such  as  to  foster 
equal  and  symmetrical  industrial  development  and 
thus  t<>  promote  the  general  welfare. 

If  the  foregoing  is  true  the  primary  observation 
in  the  consideration  of  any  specific  railway  charge  is 
that  it  cannot  properly  be  declared  to  be  either  jusi 
or  unjust,  unless  it  is  studied  in  connection  with  the 

oeral  schedule  of  charges,  and  unless  the  entire 


152  THE   POSTAL   DEFICIT. 

revenue  is  examined  as  to  its  relation  to  the  aggre- 
gate expenses  for  operation  and  the  amount  of  capital 
invested.  When  the  investigation  of  the  reason- 
ableness of  railway  mail  pay  is  approached  in  this 
manner  it  will  appear  at  the  outset  that  the  current 
adjustment  of  railway  income  to  railway  expenses 
and  investments  is  reasonable.  This  could  probably 
be  shown  inductively,  but  the  demand  upon  statis- 
tical science  would  be  a  severe  one  if  it  were  to  be 
attempted  by  its  method,  and  other  inductive  proof 
must,  in  this  case,  be  fragmentary,  and  thus  open  to 
misinterpretation.  The  large  proportion  of  railway 
operating  expenses  paid  as  wages,  the  urgent  neces- 
sity of  maintaining  road-bed  and  equipment  in  a 
satisfactory  physical  condition,  the  large  proportion 
of  railway  securities  which  receives  no  return,  and 
the  very  low  average  rate  paid  on  those  securities 
which  do  receive  dividends  or  interest,  all  indicate 
that  the  present  total  revenue  is  not  too  high.  If  the 
question  is  considered  deductively,  however,  the  con- 
clusion is  unmistakable  and  the  process  of  reasoning 
by  which  it  is  reached  is  simple  and  satisfactory.  The 
large  proportion  of  railway  traffic  is  made  up  of  com- 
modities for  which  there  are  numerous  sources  of  sup- 
ply. The  railways  have  to  make  rates  which  will  en- 
able these  products  to  be  sold  in  competitive  markets, 
and  this  brings  each  railway  into  separate  alliances 
with  the  shippers  of  each  locality  which  it  serves. 
These  alliances  compete  sharply  among  themselves, 
and  as  there  is  no  known  cost  of  production  of  spe- 
cific railway  services,  while  any  traffic  that  pays  more 


THE    POSTAL    DEFICIT.  153 

than  the  direct  cost  incurred  in  its  behalf  is  really 
profitable,  the  railway,  as  a  producer,  must  accepi 
whatever  sacrifice  in  revenue  is  necessary  to  protect 
the  volume  of  its  traffic.  If  it  did  not  do  so  the  local 
producers,  whose  commodities  it  carries,  would  he 
forced  out  of  business.  In  this  manner  the  constant 
adjustment  and  readjustment  of  railway  revenue  to 
a  basis  that  is  reasonable  to  the  public  is  auto- 
matically enforced  by  commercial  forces  that  are 
more  powerful  than  the  efforts  of  railway  officers 
and  stronger  than  legislative  action.* 

As  railway  revenue  is  not  in  the  aggregate  excess- 
ive, the  theory  of  public  utility,  which  should  prop- 
erly determine  the  relative  adjustment  of  charges  for 
different  services,  must  find  some  rate  that  is  too  low, 
or  show  that  the  rate  in  which  a  reduction  is  pro- 
posed does  not  produce  as  much  net  revenue  as  might 
be  secured  with  a  lower  rate,  in  order  to  declare  that 
another  is  too  high.  A  reduction  in  the  revenue  se- 
cured from  one  kind  of  service  must  be  balanced  by 
an  increase  in  that  from  another,  or  the  railway  busi- 
ness  becomes  unreasonably  unprofitable.  This  would 
first  act  injuriously  upon  railway  employes,  then 
upon  railway  patrons,  by  impairing  the  quality  of 
the  services  rendered  and  endangering  life  and  prop- 
erty in  transit  and  limiting  facilities  ;  then  upon  the 
owners  of  railway  capital,  and  finally  upon  the  gen- 
eral public  by  destroying  business  stability. 


11 


154  THE    POSTAL    DEFICIT. 

This  simple  question  must  then  be  asked :  What 
rates  should  be  raised  to  balance  the  loss  of  revenue 
that  would  obviously  result  if  mail  rates  were  re- 
duced? It  will  not  do  to  answer  loosely  that  the  re- 
duction  may  be  made  up  by  higher  rates  on  traffic 
that  is  of  less  social  importance  than  .  mail  traffic. 
The  true  application  of  the  principle  of  public  utility 
involves  the  performance  of  all  transportation  that,  is 
socially  desirable  without  sacrificing  any  because  of 
its  small  relative  importance.  Rates  have  been  ad- 
justed to  this  basis,  with  more  or  less  accuracy,  ever 
since  traffic  began  to  be  classified,  for  the  adjustment 
is  not  dependent  upon  the  conscious  acceptance  of  the 
principle.  Nor  does  the  principle  of  public  utility 
require  the  lowest  rates  upon  traffic  of  the  highest 
social  importance.  It  merely  requires  rates  that  will 
insure  the  transportation,  and  if  such  traffic  can  bear 
higher  rates  than  those  imposed  on  business  of  lower 
social  importance  which  is  charged  those  necessary 
to  secure  its  movement,  it  would  be  unwise  and 
socially  detrimental  not  to  enforce  them.  There  is 
no  evidence  that  mail  transportation  or  postal  de- 
velopment is  hampered  by  the  present  scale  of  rates; 
there  is  no  adequate  evidence  that  any  class  of  traffic 
moves  too  abundantly  on  account  of  too  low  rates. 
The  conclusion  from  this  analysis  is  that  the  strict 
application  of  the  principle  of  public  utility  to  the 
present  charges  for  carrying  mail  indicates  very 
plainly  that  the  railways  are  not  overpaid. 


THE    POSTAL    DEFICIT.  155 


GENERAL    CONCLUSK  >NS. 


At  the  outset  of  this  work  it  was  suggested  thai 
many  different  means  for  eliminating  the  postal 
deficit  might  befound.  As  it  is  being  completed  the 
daily  papers  contain  evidence  that  the  deficit  is  not 
unlikely  entirely  to  disappear  as  the  result  of  con- 
tinued prosperity  and  the  natural  increase  of  postal 
business  under  current  methods  and  at  current  rat-  - 
This  evidence  is  found  in  the  synopsis  of  the  forth- 
coming annual  report  of  the  Postmaster  General, 
which  appeared  in  the  morning  papers  of  Decem- 
ber 10,  1900.     This  shows  that  the  deficit  for  the 

fiscal  year  which  ended  with  June  30,  U was  but 

15,385,688,  or  less  than  half  that  of  1897  and  more 
than  three  and  one-half  million  dollars  less  than  in 
1898.  The  Postmaster  General  has  estimated  the 
deficit  of  L901  as  |4,634,307. 

The  rapidly  decreasing  difference  between  postal 
receipts  and  expenditures,  together  with  the  proba- 
bility that  a  small  deficit  is  the  only  practicable 
guarantee  against  a  surplus,  which  would  constitute 
an  actual  tax  upon  those  who  use  the  mails  and 
might  lead  to  extravagant  methods,  would  adequately 
excuse  the  student  from  considering  methods  of 
eliminating  the  present  deficit.  If  the  discussion 
could  serve  no  other  purpose,  there  would  in  fact  be 
little  reason  for  its  introduction.  Such,  however,  is 
not  the  cas  It  is  quite  possible  that  it  may  con- 
tain or  lead  to  suggestions  which  may  materially  im- 


156  THE    POSTAL   DEFICIT. 

prove  the  postal  service  by  pointing  the  way  to 
important  economies. 

Only  the  heads  of  such  a  discussion  will  be  intro- 
duced. The  first  inquiry  in  this  direction  would 
probably  be  addressed  to  the  organization  of  the 
postal  department.  Is  that  organization  as  efficient 
as  possible  and  as  economical  as  justice  to  its  many 
loyal  and  able  employes  will  permit  ?  This  ques- 
tion might  have  been  raised  earlier  with  perfect 
propriety,  for  the  just  application  of  the  principle  of 
public  utility  to  the  question  of  railway  compensa- 
tion would  require  economy  in  the  postal  service 
equal  to  that  in  the  railway  service.  If  postmasters 
and  other  postal  employes  receive  higher  pay  or 
serve  less  efficiently  than  the  corresponding  em- 
ployes in  the  railway  service,  it  would  be  necessary 
to  require  the  substitution  of  a  condition  of  substan- 
tial equality  before  reducing  railway  mail  pay.  To 
neglect  this  would  be  unjust  to  railway  employes. 

The  antagonism  of  the  Post-office  Department  to 
the  present  situation  in  regard  to  second-class  mail 
matter  is  universally  familiar.  The  officers  of  the 
Department  are  apparently  firm  in  the  opinion  that 
the  elimination  of  what  they  regard  as  the  abuses  of 
the  present  system  in  connection  with  this  class  of 
mail  would  create  a  balance  between  postal  reve- 
nues and  expenditures.  The  present  writer  is  not 
certain  that  this  would  occur  but  the  suggestion 
merits  investigation.  On  the  other  hand,  it  is  not 
impossible  that  a  different  adjustment  of  rates  might 


THE    POSTAL    DEFICIT.  157 

be  effected  without  interfering  with  any  legitimate 

mail  business.     Without  expressing  any  opinion  as 
to  the  probable  result  of  such  an  investigation,  it 

may  be  suggested  that  the  imposition  of  zone  rates 
on  other  than  first-class  matter  might  not  in  any  way 
restrict  the  present  volume  of  mail  traffic.  This 
might  require  the  reclassification  of  the  lower  forms 
of  mail,  and  it  would  very  possibly  be  found  desir- 
able to  accept  mail  shipments  of  greater  weight  than 
are  now  taken.  The  principle  which  justifies  rates 
regardless  of  distance  does  not  apply  with  equal 
force  to  all  kinds  of  mail  matter,  and  there  is  cer- 
tainly some  reason  for  contending  that  to  some  of 
them  it  does  not  apply  at  all.  The  possibility  of 
radical  reorganization  of  American  postal  practices 
in  regard  to  the  less  remunerative  forms  of  mail 
surely  deserves  more  attention  than  it  has  appar- 
ently received.  In  examining  it,  however,  it  will 
not  do  to  overlook  the  powerful  opposition  that 
would  be  aroused  should  material  increases  in 
charges  be  urged,  unless  they  could  be  accompanied 
by  changes  that  would  increase  the  value  of  the 
postal  service  to  those  who  avail  themselves  most 
largely  of  the  facilities  for  transporting  periodicals, 
books,  and  merchandise  offered  by  the  Government. 
The  concluding  suggestion  relates  t<>  the  possibility 
of  securing  greater  revenue  by  preventing  the  com- 
petition of  private  concerns  with  the  postal  depart- 
ment in  the  transportation  of  the  lower  forms  of 
mail,  just  as  such  competition  has  been  excluded  in 


158 


THE    POSTAL    DEFICIT. 


the  case  of  first-class  mail.  The  difficulty  of  effect- 
ing  such  a  change  is  a  strong  reason  against  regard- 
ing it,  at  the  present  time,  as  a  practicable  remedy, 
but  it  is  possible  that  postal  development  may  yet 
make  it  necessary. 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 

LOAN  DEPT. 

This  book  is  due  on  the  last  date  stamped  below,  or 

on  the  date  to  which  renewed. 

Renewed  books  are  subject  to  immediate  recall. 

H 


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General  Library 

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